Law Office of Kevin Rego

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Fri, 02 Jan 2026 21:13:42 GMT

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IRS TAX PROBLEMS: SERIES CP59 NOTICES COMING OUT

Mon, 15 Sep 2025 20:02:16 GMT

WHAT TO LOOKOUT FOR IN A CP59 NOTICE

IRS CP59, CP59R, and CP59SN Notices:

What They Mean and How to Respond

The IRS has renewed a "touch" program where they are sending out notices to "touch" taxpayers that may need a little nudge to get tax compliant. There are a series of these notices, but the most recent are the series 59 letters.

Have you received an IRS CP59, CP59R, or CP59SN notice in the mail? These letters often cause confusion, but understanding them can save you time and stress.

Here’s what each notice means:

IRS CP59 Notice – The IRS is letting you know they have not received a tax return for a prior year. This could mean anywhere from 2023 on back.

IRS CP59R Notice – A reminder to file your current year tax return before the due date. Extensions are due 10/15/25, so make sure to mark your calendar.

IRS CP59SN Notice – The IRS says they haven’t received your current year tax return. This is similar to the CP59R notice, just some different wording---a reminder that the IRS is waiting for your return.

Many taxpayers wonder if these letters mean they are already in trouble. The good news:

GENERALLY , these notices do not always mean your return is delinquent. For example, if you filed for an extension, you may still receive a CP59R or CP59SN because the IRS’s system simply doesn’t show your return yet. The IRS is notorious for "the left hand not knowing what the right hand is doing." Therefore, even with an extension on file, you may get one of these notices.

What should you do if you get a CP59 series notice?

First, check your records. If you’ve already filed a tax return, keep a copy of your return or extension confirmation. Often, the IRS just hasn’t processed your tax return yet since they are way behind (especially if you filed your tax return on paper rather than efile). If you haven’t filed, take the notice as a reminder to do so as soon as possible. Again, for this year, the last date to file your 2024 tax return without a late filing penalty is 10/15/25.

Getting an IRS notice can be stressful, but it doesn’t always mean you did something wrong. Always fully read the entire document.

Need Help Responding to an IRS CP59 Notice?

If you’ve received an IRS CP59, CP59R, or CP59SN notice and aren’t sure what to do, don’t wait until the IRS follows up. Ignoring an IRS letter or notice is a really bad plan.

As a tax attorney, I help clients resolve these issues quickly and avoid unnecessary penalties or collection actions. Contact my office today for a confidential consultation and get peace of mind knowing your tax situation is being handled the right way.

IRS Tax Problems: Incorrect balance due notices

Fri, 20 Jun 2025 22:21:42 GMT

IRS Payment Processing Delays: What taxpayers need to know

6/20/2025

The IRS has recently acknowledged a delay in processing some electronic tax payments, which may result in taxpayers receiving balance-due notices—even when payments were made on time.

This issue primarily affects those who electronically paid the full amount due from their tax return. In many cases, the IRS received the payment, but it has not yet posted it to the taxpayer’s account. A manual entry process is being developed to override the system errors.

If you paid your taxes on time and received a balance-due notice, there is no need to call the IRS right away. The IRS advises to wait until after July 15, 2025 to take further action. Any penalties or interest that the IRS added in error will be adjusted once your payment is correctly applied.

As a tax attorney , I regularly monitor clients’ IRS tax transcripts for discrepancies like this—often catching issues before a notice (or AUDIT) is even sent to the taxpayer.

While this situation is widespread and temporary, it highlights the value of proactive tax account monitoring to avoid unnecessary stress and escalation.

If you’re concerned about notices or want peace of mind year-round, consider setting up IRS account monitoring through a trusted tax professional .

Kevin Rego

Law Office of Kevin Rego

THE CP14 DEMAND FOR PAYMENT

Mon, 09 Jun 2025 01:38:57 GMT

'tis the season for CP 14 notices to taxpayers

I have noticed a marked uptick in the number of clients that are receiving CP 14's in the mail. The CP14 is "IRS slang" for the first demand for payment after a tax return is filed with a balance due. Note the "CP14" in the upper right hand column of the attached example.

What to Do If You Receive IRS Notice CP14

If you’ve received an IRS Notice CP14 in the mail it is not a crisis. This notice is the IRS’s way of telling you that you have a tax balance due and they expect you to take some sort of action on the matter. Ignoring the notice is not one of their suggested actions!

What the CP14 Means

A CP14 is a formal notice from the IRS letting you know that, according to their system, you have a balance due on your IRS account. This could be due to a number of reasons—maybe you made a partial payment or maybe you forgot to mail a payment with your tax return.

The notice will show:

The amount of tax you owe based on your tax return;
Any payments that were made on that tax year (could be you sent a check, made estimated payments, or had federal taxes withheld from your paychecks);
Any added penalties and interest;
A due date for the balance due (usually within 21 days).

What You Can Do

You have a few options when you receive a CP14:

Pay in full : This is the fastest and least expensive way to resolve the issue. Make sure to retain proof of your payment; whether that be a cancelled check or a confirmation page print-out if you pay online. If you pay online, don't just "GOOGLE" IRS payments--you could get scammed! Go directly to the IRS website and make the payment directly through their secure system. If you have an IRS account set up, that is even better. ( www.irs.gov ).

Set up a payment plan : If you can’t pay in full, the IRS offers installment agreements (several different options available, depending on your financial situation). Installment agreements can get quite involved, especially if the amount due is significant. Consider using a tax professional's assistance if you need a payment plan.

Dispute the amount due : If you do not owe the amount, you may be able to challenge the IRS assessment rather than pay the tax. The method to challenge the assessment is varied, depending on the circumstances of your tax matter.

Why It Matters

Failing to act on a CP14 notice can lead to more serious collection efforts, including liens or levies. This letter is the first of several letters that will come to you--each subsequent letter taking a more dire tone. If you are going to full pay the balance, do yourself a favor and pay it sooner than later.

Bottom line : A CP14 means the IRS thinks you owe money. Read the notice carefully, confirm the amount, and take action—whether that’s paying, setting up a plan, or disputing it.

Need help resolving your IRS notice? Contact my office today . I specialize in IRS collection matters and can help you understand your options and respond appropriately—before the situation escalates!

IRS installment agreements and incurring more tax debt

Tue, 03 Jun 2025 20:17:13 GMT

IRS Installment Agreements: How to handle more tax debt!

I recently had a question from a client that comes in frequently:

Question:

What happens if you are on an IRS installment agreement (payment plan) and you incur more tax debt from a recently filed tax return?

Answer:

Nothing good happens when you incur more tax debt!

One of the terms you agree to when establishing an installment agreement with the IRS is that you will timely pay any "new" tax balances due. New balances often occur when you file your current year tax return and you owe the IRS money. The IRS DOES NOT want you to continue to owe money year after year (often referred to as "pyramiding" tax liability). The goal is to have enough federal taxes withheld from your paycheck OR make estimated payments quarterly to cover your tax bill at the end of the year.

Contrary to popular thought, the IRS does not simply "rollover" your "new tax debt" into your "old payment plan". On very rare occasions, they MAY offer to do that, but generally the new debt will require a modification of your current installment agreement OR, worse case scenario, will default your agreement and you will start from scratch on all applicable years.

What the IRS will not let you have multiple installment agreements in place at the same time. The IRS wants ONE installment agreement with ONE monthly payment covering ALL applicable years in which you owe . Think about if from their perspective: It is hard enough to manage a taxpayer that owes taxes for multiple years---now have multiple tax payment plans for multiple years for a single taxpayer? That is a nightmare.

So--the simple answer is: If you can't pay your taxes, explore the possibility of an installment agreement (and there are several types, so consult a tax attorney for the best option) and pay your "new taxes" on time!

A "Double-Claimed" Dependent leads to a Double Audit for Parents

Fri, 30 May 2025 01:12:30 GMT

CLAIMING A DEPENDENT AFTER DIVORCE

Navigating the complexities of tax law can be daunting, and the recent U.S. Tax Court case of Correll v. Commissioner (T.C. Memo 2025-31) serves as a crucial reminder of the importance of understanding dependency exemptions and child tax credits. This case highlights a common pitfall for divorced or separated parents: claiming a child as a dependent when the child doesn't meet the residency requirements or when a divorce agreement specifies otherwise.

The Heart of the Matter: Who Can Claim the Child?

Melissa Correll, the petitioner in this case, was the noncustodial parent of a minor child. For the 2021 tax year, both Ms. Correll and the child's custodial parent (her ex-husband) claimed the child as a dependent on their federal income tax returns. The IRS responded with a tax return audit and subsequently issued a Notice of Deficiency to Ms. Correll, disallowing her claim of the child as a dependent. The core reason? The child did not live with her for more than half of the year.

Key Legal Principles at Play

At the center of this case are the definitions of a "dependent" and a "qualifying child". For a child to be a "qualifying child," they must have had the same principal place of abode as the taxpayer for more than half of the year . In Ms. Correll's situation, her child did not live with her for more than half of 2021; instead, he lived with his father for the entire year. This fact alone meant he was not her "qualifying child".

Tie-Breaker Rules and Noncustodial Parents

There's a provision that allows noncustodial parents to claim a child as a dependent on their tax return, but it comes with strict requirements : the custodial parent must essentially "release" the dependent by signing a written declaration that they will not claim the child on their return. This declaration must be attached to the noncustodial parent's return . ( IRS FORM 8332 ) Neither of these conditions was met in Ms. Correll's case.

Furthermore, a divorce settlement agreement from Ms. Correll's separation and divorce specifically stated that the child's father was entitled to claim the child as his dependent for the year in question. While this was taken into account by the judge, simply relying on a divorce settlement agreement is very risky! You are much better off filing the FORM 8332.

Impact on Child Tax Credit-She lost that one too!

Because the child was not Ms. Correll's "qualifying child" for dependency purposes, she not only lost out on the dependent exemption, but she lost the child tax credit for him also. A child tax credit can only be claimed for a "qualifying child" who meets the section 152(c) definition and is under the age of 17.

What This Means for You

The Correll case underscores several critical points for anyone navigating dependency exemptions and child tax credits, especially in co-parenting situations:

Residency is Key: For a child to be a "qualifying child," they must live with you for more than half the year. This is a fundamental requirement.

Divorce Decrees and Agreements: Pay close attention to your divorce or separation agreements regarding who is entitled to claim children as dependents. Following the terms of the agreement will keep all parties on track and informed---and will likely keep you off the IRS audit target.

Written Declarations for Noncustodial Parents: If you are a noncustodial parent and wish to claim a child, ensure you have a signed written declaration from the custodial parent, and that it is properly attached to your return.

Burden of Proof: Remember that the burden of proof generally lies with the taxpayer to demonstrate their entitlement to deductions and credits. Therefore, it is common for the IRS to AUDIT BOTH PARENTS (called a "whipsaw audit) and require documentation from so that the auditor can determine who rightfully may claim the child.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Tax Problems: Getting a "refresher" notice from the IRS

Mon, 21 Apr 2025 20:26:00 GMT

San Mateo, CA:

The IRS gets busy just like the rest of us. They are especially busy now with many of the things affecting their organization coming from the current administration. Politics aside, the IRS is still very much "in business".

IRS NOTICE CP71C

I have recently seen an uptick in the number of clients and potential clients that are receiving IRS NOTICE CP71C letters. Those letters are advising taxpayers that they have a balance due for a tax year on their account. Some clients have been blissfully hoping that the IRS has "lost track" of their account and some how, miraculously, their past tax debt has disappeared! Unfortunately for them, that is not the case.

The CP71C is almost like a "refresher" letter. Rather than harsh tones, the IRS is simply INFORMING the taxpayer that there is a balance due and the various ways to clear up that situation. It is often sent after a period of time where the IRS has not reached out in a while to delinquent taxpayers. It gives an opportunity for the taxpayer to get into compliance.

More importantly for the IRS, it gets the taxpayer back into the IRS collection system (the automated system that "spits out" letters when no action is taken and the letter is deemed ignored)---with the more threatening letters to come.

What should I do if I get a CP71C?

As with all IRS notices, carefully read the letter fully, noting the tax year and amount that the IRS says is due. Does this "jive" with your recollection and records or is something wrong? The IRS does make mistakes!

Next, do not ignore the notice if everything appears correct. The refresher notice is a great opportunity to get your tax situation moving towards resolution with the IRS--whether that be with an installment agreement, and offer in compromise, or proving uncollectible status based on financial hardship.

It is unlikely the IRS is going away anytime soon. As adjustments are made in Washington DC, it may get harder and harder to get someone at the IRS to help, so consider reaching out to a tax attorney or tax professional who will evaluate your situation and make suggestions on how to get yourself OFF OF THE IRS MAILING LIST!

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS TAX PROBLEMS: Gambling Winnings continue to interest the IRS

Sun, 10 Nov 2024 02:21:00 GMT

San Mateo, CA: IRS to Pursue Unreported Gambling Winnings: Potentially $1 Billion+ Income Tax Revenue

A recent report by the Treasury Inspector General for Tax Administration (TIGTA) has revealed that the IRS may be missing out on substantial tax revenue due to unreported gambling winnings. This gap, largely due to non-compliance and reporting issues, could mean over $1 billion in unpaid taxes from gambling income.

Key Findings in the TIGTA report:

1. Non-filers with Significant Gambling Winnings :

TIGTA reviewed Forms W-2G (which report gambling winnings) issued between 2018 and 2020. They found that approximately 148,900 individuals, each with $15,000 or more in gambling winnings, failed to file tax returns. These non-filers represented about $13.2 billion in reported gambling income. Among these, over 139,000 individuals were included in the IRS’s inventory of non-filers, but enforcement actions have been limited.

2. Potential Revenue Increase:

The IRS estimates that addressing high-income non-filers (those with total income exceeding $100,000) could generate an additional $1.4 billion in tax revenue. TIGTA’s findings indicate the significant impact that focused enforcement could have.

3. Missing Taxpayer Identification Numbers (TINs):

TIGTA also noted that hundreds of Forms W-2G lacked a TIN or Social Security Number, making it difficult for the IRS to track the income and assess tax liability accurately.

4. Sports Betting and Online Gambling :

As online gambling continues to grow, the IRS has limited measures to identify potential tax non-compliance in this area. TIGTA recommended expanding wager codes to cover sports betting and scanning the current landscape of online gambling for compliance risks.

IRS’s Response to the TIGTA report:

The IRS agreed to implement most recommendations, including enforcement actions against non-filers with significant gambling winnings.

As gambling activities increase, taxpayers should be aware of reporting obligations to avoid penalties and ensure compliance.

If you are being audited by the IRS for gambling-related tax issues, consider engaging a tax professional to help you navigate the journey.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS Tax Problems: When your spouse's debt problems become your debt problems!

Sun, 11 Aug 2024 18:18:00 GMT

San Mateo, CA: It often happens to those that are newly married but can happen to any couple; debts owed by one spouse comes back to "haunt" the non-liable spouse who may not even know about these "skeletons". It can really damage a relationship---but there is a solution.

Understanding IRS Injured Spouse Relief and Refund Offsets

When you file a joint tax return with your spouse, the IRS considers both of you as a single financial entity. This means any tax refund resulting from your return is seen as jointly owned. This concept is know as jointly and several liability.

Issues can arise, however, when one spouse has previous outstanding debts—such as prior unpaid federal or state taxes, child support, or other federal or state non-tax debts. Under the Internal Revenue Code, the IRS has the authority to apply your tax refund to these debts before issuing any remaining amount as a tax refund. This process is known as a refund offset . The refund offset can come from the IRS or the Bureau of Fiscal Service. This can happen without your prior knowledge or consent, leading to unexpected financial strain and surprise.

A refund offset can be particularly frustrating for the spouse who does not owe the debt (known as the "non-liable spouse" or "injured spouse"). The refund offset may ending up taking the entire tax refund to satisfy the prior debt, leaving the the injured spouse to feel they got victimized. In situations where only one spouse is liable for the debt, the injured spouse may seek relief to recover their portion of the overpayment. The IRS must be notified and informed of the situation.

There are burdens and benefits to filing a joint tax return. Understanding the implications of filing jointly when one spouse has "non-joint" debts is crucial. While joint filing often provides tax benefits, it also opens the door to refund offsets. Knowing your options as a non-liable spouse, including the possibility of Injured Spouse Relief, can help you protect your personal financial interests.

It’s important to be aware of the potential for a refund offset if your spouse has any outstanding obligations. There are strict deadlines for filing for such relief, so if you find yourself in this situation, consider your filing options carefully and seek professional advice to determine the best approach for your specific circumstances.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS Tax Problems: Monthly expenses: Actual vs. Allowable

Sun, 28 Jul 2024 18:48:00 GMT

San Mateo, CA: When you submit an Offer in Compromise or a request for an installment agreement, the IRS wants to know your monthly income and expenses using financial disclosure forms. The IRS wants to ensure that you are paying the most you can without causing a hardship. This often leads to a conflict of what the TAXPAYER THINKS they can afford and what the IRS THINKS the taxpayer can afford!

When calculating the reasonable collection potential (RCP) for an Offer in Compromise (OIC) or an installment agreement, the IRS does not simply accept whatever expenses a taxpayer claims each month. Instead, the IRS uses national and local standards to determine allowable expenses , which can differ significantly from a taxpayer's actual expense s.

Allowable expenses are standardized amounts published by the IRS for basic living expenses such as food, clothing, housing, and transportation. These standards are designed to ensure that taxpayers have enough to cover their basic needs while still paying off their tax debts. For example, the IRS has specific guidelines for housing, vehicle, and utility expenses based on the taxpayer's local geographic location. The allowable expenses are often less than the taxpayer's actual expenses.

Actual expenses, on the other hand, are the amounts that a taxpayer actually spends each month. While taxpayers might think that all their actual expenses will be considered, the IRS only allows expenses that meet their necessary expense test and are "capped" by the allowable expense tables . If a taxpayer's actual expenses exceed the IRS's allowable standards, the excess amounts are generally not considered when calculating the RCP.

In some rare cases, the IRS may allow deviations from the standard amounts if the taxpayer can demonstrate special circumstances Such circumstances include advanced age, poor health, or a disability that may justify higher expenses.

Understanding the difference between actual and allowable expenses is crucial for taxpayers considering an OIC or installment agreement. By knowing what the IRS will and will not accept can mean the difference between having your OIC or installment agreement accepted or rejected.

While taxpayers may have various actual monthly expenses, the IRS uses standardized allowable expenses to determine what can be claimed. While this ensures consistency and fairness in the collection process, it also means that not all your actual monthly expenses will be considered. Taxpayers should be aware of these limits when preparing their financial information for an OIC or installment agreement and be prepared to explain why they need to deviate from the allowable expenses, if requested.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS Tax Problems: Intent to terminate your payment plan

Wed, 26 Jun 2024 03:13:00 GMT

San Mateo, CA: It was stressful but you were able to work out a payment plan (know as an installment agreement) with the IRS. Then comes an IRS Notice CP523--Intent to terminate your installment agreement along with a hefty bill. NOW WHAT DO YOU DO?

Understanding the IRS Notice: Intent to Terminate Installment Agreement

Understanding the CP523, being aware of its implications, and knowing the next steps can help mitigate potential issues.

An Intent to Terminate Installment Agreement notice is sent when the IRS believes you have defaulted on your installment agreement. This agreement, typically arranged to allow taxpayers to pay off their tax debt in monthly installments, is a binding contract between you and the IRS. There are some common reasons for receiving a CP523 notice include missing a payment, failing to file a required tax return on time, or filing a tax return with a balance due and unpaid.

The IRS will terminate MULTIPLE TAX YEARS within the installment agreement for a perceived "violation" of the terms. You literally will start from scratch if you are not careful.

When you receive this notice, it’s crucial to act promptly:

Taking immediate action after receiving a CP523 notice is essential to avoid further penalties and more complications. Stay proactive, don't hide your head in the sand, and seek professional assistance to navigate this challenging situation effectively.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS TAX PROBLEMS: Did you get an unexpected tax bill?

Mon, 24 Jun 2024 22:10:00 GMT

San Mateo, CA: The IRS initially sends taxpayers their unpaid "tax bills" on a Notice called a CP14.

What’s Happening with IRS CP14 Notices?

Recently, some taxpayers have been surprised to receive CP14 notices from the IRS. These notices indicate a balance due, despite the taxpayers having made their payments when filing their 2023 tax returns.

If you paid your 2023 tax return balance using electronic methods or by check, this billing situation can arise generally because of two main reasons:

I paid my taxes but still got the CP14--Now what?

The IRS has told taxpayers who have received a CP14 notice but believe they have paid their taxes in full and on time to sit tight for now. The IRS is looking into the cause of the delayed payment postings. If you paid on time, do not worry about penalties and interest--those will be automatically adjusted once the proper processing date is established.

The IRS acknowledges the inconvenience this processing delay has caused and extends its apologies to the affected taxpayers. The agency is working to resolve these discrepancies and ensure all payments are correctly applied.

Conclusion

If you received a CP14 notice despite having paid your 2023 taxes in full, keep documentation of that payment--whether it be a cancelled check from your bank or a confirmation number from your electronic/online payment in a safe place. It may be needed later. For now, the IRS says they are processing as quickly as possible and most of the issues should be resolved soon.

If the situation is not resolving or if you get further letters threatening a lien or levy action, it is time to contact a tax professional who is familiar with the IRS collection process to represent your interests.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS TAX PROBLEMS: Disorganization is no defense in Tax Court!

Mon, 17 Jun 2024 18:14:43 GMT

Tax Court did not find a disorganized "shoebox" compelling which leads to a big liability

San Mateo, CA:

In a recent US Tax Court case, the Wrights' (owners of a couple of small businesses--catering and construction) learned a very important lesson in document organization.

The Wrights were audited by the IRS for their 2014-2016 tax returns. A substantial portion of their business expenses were disallowed by the IRS for lack of substantiation. A total of $46,680 in tax and $9,335 in accuracy-related penalties were charged by the IRS.

The Wrights, feeling that their case was worthy of an appeal, petitioned the US Tax Court to hear their case.

The Wrights presented the Tax Court with 44 exhibits and almost 2,000 pages of documents (receipts, invoices, etc). So far so good....except, many of the receipts and adding machine tapes did not add up to the amounts claimed on their returns. In addition, an additional $58,473 in income was "found" on the catering business bank records of deposits. The documents presented to the court were disorganized, with handwritten notes in the margins, and double entries in the documents (a credit card record showing meal expense and a restaurant bill showing the same expense counted twice). There were multiple instances of inconsistences in the documents, leading the court to question the genuineness of the evidence offered--even noting that some entries appeared to be fabricated.

The Wrights were warned by the judge beforehand that a clear and concise spreadsheet of expenses being claimed would be necessary to present as evidence. Essentially, a "shoebox" of disorganized and jumbled documents were not acceptable. Unfortunately for the Wrights, they did not take that advice.

In the end, after reviewing the mess that he was presented, the judge found the Wrights did not meet their burden of proof. Because of the finding by the court of fabrication and questioning the genuineness of some of the records, the court further found that the Wrights' credibility was so damaged, that their uncorroborated testimony was essentially disregarded. The Wrights' lost their appeal.

Running a business is really no different than an individual tax return. The numbers on the tax return must be "backed up" to substantiate any expense deduction. An organized, clear, and complete record of those substantiations are necessary----putting them in "messy shoebox" and expecting the IRS or Tax Court to fix your organizational deficiency will lead to a bad result for you.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

IRS Tax Problems: The IRS didn't even listen to me!

Fri, 14 Jun 2024 19:44:00 GMT

San Mateo, CA: What if you get audited (or a notice in the mail) and the IRS never even considered your side of the story?

It happens--whether it be from a "jerk" of an IRS auditor or simply the IRS never responded to your letter explaining why you think you are right. You are summarily ignored.

Time passes--you think you might be OK, then suddenly, another notice appears (maybe a certified letter) telling you that you owe the tax due.

Are you stuck with the bill---having been ignored by the IRS?

NO!

Two common ways to challenge a tax that was assessed against you is by Audit Reconsideration or an Offer in Compromise-Doubt as to Liability . These methods of challenging the tax assessment give you a change to be heard; even after you were ignored.

The IRS likely won't tell you about these challenge opportunities in their letter so knowing that an assessment may not be final is a key concept.

Each of these challenge methods have their requirements---with good things and bad things attached to each method. For example, if the IRS has taken some of your refunds or levied your account to satisfy the tax bill, then it might be better to file an Audit Reconsideration because if you are successful, the money they wrongly took would be refunded. An Offer in Compromise-Doubt as to Liability might be best if you are being threatened with collection activity. Filing an offer suspends collections while you attempt to work through the process--an Audit Reconsideration does not freeze collections.

If you feel your tax bill after an IRS audit or notice is not justified, contact a tax professional familiar with IRS collections to take a look at your case. It may be that challenging the underlying assessment is the best way to get to the right answer!

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650-933-5222

IRS Tax Problems: Will my IRS tax debt ever go away?

Wed, 22 May 2024 23:42:00 GMT

San Mateo, CA: YES---your tax debt has a built-in "sunset" clause and does not live forever!

Clients often feel the burden of their tax debt will be something they have to endure forever. IRS tax debts from many years past have not been dealt with except to hide the IRS envelopes in a drawer somewhere.

This burden has many negative effects; including feeling that it is futile to get help from a tax professional, pointless to file tax returns because the IRS is just going to take their money anyway, or working "under the table" for cash and thus risking their livelihood to stay anonymous and hide from the IRS.

Fear not! Old tax debts don't stay forever!

There is such a thing called a Collection Statute Expiration Date (CSED) in federal tax law. The CSED marks the end of the allowable collection period or the time period established by law for the IRS to collect taxes. The CSED is normally ten years from the date of the tax assessment.

Like everything in the tax world, this is not a hard and fast rule. There are several instances when the 10 years can be suspended (or tolled) for a period of time thus extending the 10 year limit. This is also an opportunity for the IRS to "turn on" the suspension of the statute and "forget" to turn it off---resulting in a tax debt that remains on the books even when it is not owed anymore. I have had clients come to me who were making payments on DEBTS THAT WERE EXPIRED--THEY LEGALLY DID NOT OWE THAT MONEY TO THE GOVERNMENT! They had no idea!

It is CRUTIAL to have a qualified tax professional examine your IRS account to give you a proper analysis BEFORE you decide what course of action to take, especially if you have "older" tax issues haunting you. Having that knowledge ahead of time will prevent you from paying a tax bill that you may not actually owe.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650-933-5222

IRS Tax Problems: What happens if I don't file my taxes?

kevin@regotaxlaw.com (Kevin Rego) — Mon, 20 May 2024 20:47:50 GMT

You haven't filed a tax return in years and nothing has happened---yet!

The IRS continues to ramp up efforts to improve tax compliance and ensure fairness within the tax system. As part of that effort, the IRS announced in early March that they have begun focusing on high-income taxpayers who have failed to file federal income tax returns since 2017.

The new initiative, due in part by funding from the Inflation Reduction Act, began with the IS sending letters to more than 125,000 taxpayers who have not been heard from. The IRS develops this lead information from third party reporters---such as employers filing W-2's or brokerages filing 1099B's---indicting that the taxpayers had received income in the "required to file a tax return" range, but a tax return is lacking.

The initial notice is often a notice called a CP59 letter which asks the taxpayer to review their obligation to to file a tax return and respond appropriately either with a tax return or a form which states that no return is required. If you receive such a letter, you should carefully consider your response after an informed analysis of the tax year they are inquiring about.

Lost tax forms and incomplete records are not excuses that the IRS will accept for failing to file a return or failing to respond to an inquiry. A lack of response to the IRS will likely be deemed as a bad sign and an increase in enforcement pressure will ensue.

The best strategy--be proactive. If you have not filed your tax returns, gather the information needed and make a plan to get into compliance. That plan may include contacting a tax professional who can not only help you file the missing returns, but can help you obtain the necessary records to file an accurate return.

Penalties and interest can add a tremendous amount of financial burden on you if you wait to file. Get an idea of what you owe and work out a plan to get out of the hole and back on track before the next round of letters and enforcement includes your name and address.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650-933-5222

Wed, 18 Oct 2023 16:02:00 GMT

SAN MATEO, CA: The dreaded letter from the IRS arrives at the worst possible time. You are making holiday plans, the kids are busy in school, and work is out of control. NOW WHAT???

Here are some important points of what to look for on that IRS letter:

1. Reason for the Notice: Is it related to taxes, refunds, payments, or something else? Look in the upper right hand corner of the letter. There will be a letter number or notice number. This is a great starting point to discover what is going on. A good resource to search for the reason behind the letter is the National Taxpayer Advocate website.

2. Deadline: What is the deadline for responding to the notice or taking action, especially if it's related to unpaid taxes. Deadlines are very important because the IRS has a system of automatically jumping to the next level if no response is received.

3. Amount Owed: If the notice is about taxes owed, what is the specific amount and how it was calculated. The letter or notice is required to specify how they arrived at the amount due.

4 . Documentation Requested: Sometimes the letter or notice is asking for additional information or documentation that is needed to properly process your tax return or prove a deduction, etc. Carefully read what the IRS is asking for and be sure to include that in your response.

5. Options for Payment: If you determine that the notice or letter requesting an additional payment is correct, what happens if you can't pay the full amount immediately. There are options for payment plans OR if you are unable to pay due to financial hardship you may be made uncollectible OR qualify for an offer in compromise.

6. Penalties and Interest: What are the associated penalties and interest charges in the letter that are included in the amount due? Do I have a case to have some of those? The calculation of penalties and interest are required to be in your letter, if applicable.

7. Consequences of Ignoring: What are the consequences of ignoring the notice, such as liens, levies, or legal actions? Will the IRS simply go away?

8. Seeking Professional Help: Some people want professional advice and should consult a tax attorney or tax professional to help them respond to the notice effectively. Know your taxpayer rights and get the full picture of how to respond to the IRS letter or notice.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS TAX PROBLEMS: FRAUD LEADS TO TAX CREDIT MORATORIUM

Thu, 14 Sep 2023 21:40:00 GMT

San Mateo, CA: A somewhat controversial tax credit, the Employee Retention Credit (ERC), was put on a "timeout" today by the IRS. No new ERC claims will be processed from now until the end of the year .

I previously blogged an article on ERC fraud and the potential that employers were being "duped" by aggressive marketing companies that promised a windfall of "up to $26,000 per employee in tax credits" from the IRS.

Yes, this was a legitimate program offered during the pandemic as a relief for business who retained employees on their payroll in spite of being severely affected by pandemic factors. Passed as part of the CARES Act ( Coronavirus Aid, Relief, and Economic Security ) of 2020, the ERC allows qualified employers to amend their payroll tax returns and take a credit for certain payroll takes paid during the applicable period. The IRS has received approximately 3.6 million ERC claims over the course of the program.

The program, however, was not an automatic "handout". There was certain criteria which had to be met in order for the employer to qualify. These criteria included a documented percentage drop in quarterly revenue, closure of a business due to a government COVID health order, and other factors. The ERC was not available to individual taxpayers.

Enter the Fraudsters!

The ERC was seized upon by many an unscrupulous operator as a way to "get their cut". May fraudsters flooded the airwaves (TV and radio) with promises of thousands of dollars in ERC money for employers. The issue was that MANY of the employers that these fraudsters enrolled in their scheme were NOT QUALIFIED and NOT ENTITLED to the ERC credit. The credit was paid and the fraudsters got their percentage of ill-gotten gains.

The sheer number of applications overwhelmed the IRS and has led to today's decision to stop processing new ERC claims. Presumably, this gives the IRS an opportunity to turn its sights BACK on those ERC benefits that were already paid out that should not have been. The IRS announced this "look back" by stating they were shifting their focus to review paid claims for compliance concerns, i ncluding intensifying audit work and criminal investigations on promoters and businesses filing dubious ERC claims .

The IRS is also developing new initiatives to help businesses who found themselves victims of aggressive promoters. This includes a settlement program for repayments for those who received an improper ERC payment--more details will follow this Fall.

If you are thinking this is another example of closing the barn door after the horse has bolted, you may be right. Time will tell.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS OFFER IN COMPROMISE-DOUBT AS TO LIABILITY AND AUDIT RECONSIDERATION AS TOOLS TO SOLVE YOUR TAX PROBLEMS

Tue, 29 Aug 2023 15:45:00 GMT

SAN MATEO, CA: Navigating IRS Issues: Offer in Compromise (Doubt as to Liability) vs. Audit Reconsideration

Dealing with IRS problems can be daunting. Knowing your options and the IRS processes are key to a successful outcome.

Two standout methods for resolving tax disputes are: Offer in Compromise (OIC) with doubt as to liability, and Audit Reconsideration . These methods address distinct scenarios and vary in their processes.

Offer in Compromise (Doubt as to Liability)

If you genuinely believe that the IRS's claim against you is incorrect, the Offer in Compromise with doubt as to liability is a potential solution. This approach lets you propose a settlement amount that aligns with your actual tax obligation. To qualify, you must provide evidence that challenges the accuracy of the tax liability. A letter of explanation with a "this will never happen again" is a recipe for a rejected offer.

Audit Reconsideration

When you disagree with the outcome of an audit, Audit Reconsideration offers a second chance to present your case. This option is ideal if you can prove the audit was conducted unfairly or if new, previously unconsidered information has surfaced. Also, as quite often happens, you have moved and never received the audit notice in the mail---or you simply spaced out and forgot to respond until after the due date. Audit reconsideration offers a second "bite at the apple"--but be warned: You are at the mercy of the IRS's decision. There is no appeal rights if your reconsideration is rejected.

What's the difference?

The major difference between these methods is the timing and nature of the dispute. Offer in Compromise-Doubt as to Liability addresses tax assessments that have become final. You are presenting evidence that may have never been considered before. The focus is on the accuracy of the IRS's final determination. Audit Reconsideration, however, is for post-audit disputes, allowing you to challenge audit conclusions or, as we discussed earlier, if you missed the chance to respond to the audit all together.

Which one should you choose?

Your choice depends on your situation. If you're confident in the inaccuracy of the IRS's assessment, Offer in Compromise with doubt as to liability might be your solution. If you've already been audited and believe it was unfair, Audit Reconsideration provides an opportunity to present your case.

Not sure?

Navigating IRS complexities demands expertise and strategy. If you don't know the roadmap the IRS uses to settle matters, you are already at a huge disadvantage. Whether you're grappling with tax liability concerns or audit disputes, a phone call to the IRS won't help---they will not discuss strategy and best possible outcomes for your individual situation. Discuss your options with a tax attorney who can analyze and personalize a solution for your tax trouble.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650-933-5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Tax Problems: The Consequences of Not Filing A Federal Tax Return

Sun, 13 Aug 2023 23:42:00 GMT

San Mateo, CA: Are you aware of the potential consequences if you fail to file your federal tax return by the due date or extension date?

You should be aware of the potential consequences if you fail to file your federal tax return by the due date or extension date. From their latest estimate, the IRS believes approximately 5 million people that SHOULD have filed a tax return did not. If you are one of those taxpayers, it is crucial to understand the implications of not filing a tax return. Here are a couple of consequences:

1. Failure to File Penalty:

One of the most critical consequences of not filing your tax return on time is the failure to file penalty. This penalty is imposed by the IRS automatically as a way to encourage timely filing.

The failure to file penalty is calculated based on a percentage of the taxes you owe. It begins accruing from the original due date of the return (without regard to extension) and continues to accumulate for each month or part of a month your return is late. This can quickly lead to a substantial amount owed on top of your original tax liability.

For instance, the penalty amounts to 5% of the unpaid taxes per month that your return is late, up to a maximum of 25%. It is easy to see how quickly you can dig yourself into a tax hole with this penalty alone. Say you owe $5,000 after completing your tax return in April. By September, your tax bill has risen to $6,250 plus interest. And yes, interest is charged both on the penalty AND the tax due!

Even for those who file "a little late", if your return is over 60 days late, the minimum penalty can be either $435 or 100% of the taxes you owe, whichever is less.

2. Substitute for Return (SFR):

If you don't file a return, the IRS might prepare a "substitute for return" (SFR) on your behalf. An SFR is a tax return prepared by the IRS from the limited information available to the IRS, such as income reported by third-party reporters like employers and brokerage accounts. The SFR does its best to cover all your reported income, but rest assured that the IRS does not work as hard to include deductions and credits you're eligible which results in a potentially higher tax liability.

Why Seek Help:

If you've missed the filing deadline, don't panic. As a certified tax attorney, I specialize in tax resolution and can help you navigate through these complexities. I can assist you in filing delinquent returns, ensuring you claim all the deductions and credits you're entitled to, potentially reducing your tax liability. We may even be able to abate some of the penalties if you have good cause or are not a habitual non-filer. Even the IRS understands that things happen in life sometimes.

It is always better to address the issue proactively . If you or someone you know hasn't filed a tax return, reaching out for professional assistance can make a significant difference in the outcome. Like most things, ignoring the problem only makes it worse.

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Tax Problems: Navigating tax issues properly

Tue, 01 Aug 2023 16:24:00 GMT

San Mateo, CA: The information source where you get your tax advice may be critical when dealing with the IRS.

A recent US Tax Court case, M c Namara, TC Summary Opinion 2023-22 , announced on June 26, 2023, serves as another warning for those taxpayers who rely solely on administrative guidance found in IRS publications during tax court cases. The logic of the ruling can easily be extended to IRS audits and administrative hearings before the IRS. This decision is keeping in line with solid US Tax Court precedent.

In the McNamara case, the taxpayer disputed a tax assessment based on mortgage interest deductions claimed on his 2019 tax return. The taxpayers testified that they relied on guidance from IRS publication 936, Home Mortgage Interest Deductions, that seemed to support their position in deducting the mortgage interest on their two homes. However, when the case came before the Tax Court, the reliance on the IRS publication was not persuasive to US Tax Court Special Trial Judge Choi.

Court's Findings:

The Tax Court's decision in McNamara stated that while IRS publications can be helpful resources for taxpayers and tax professionals in preparing tax returns, they are not authoritative sources of law. Administrative guidance provided in IRS publications do not carry the same weight as the Internal Revenue Code (IRC), Treasury Regulations, or judicial precedents.

The court pointed out that taxpayers cannot rely solely on the information contained in IRS publications to substantiate their tax positions.

Message for Taxpayers:

Always contact a tax professional if you are not sure the tax return position you are taking on your tax return or when dealing with the IRS. This case serves as a reminder that relying solely on the "simple" administrative guidance from an IRS publication can turn out bad for you.

Kevin Rego

Law Office of Kevin Rego

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Tax Problems: Relief from your spouse's mistakes!

Fri, 28 Jul 2023 17:07:00 GMT

San Mateo, CA: Tax matters can be complex, and for some individuals, unforeseen circumstances can lead to confusion and potential tax liabilities.

Two common situations that are often confused with each other that taxpayers may encounter are: innocent spouse and injured spouse relief .

While both of these provisions within the Internal Revenue Code seek to alleviate tax burdens on the uninvolved spouse, they address distinct scenarios and have specific eligibility criteria linked to their requirements.

Ultimately, the two concepts seek the same goal: to allow the non-liable spouse to escape the consequences of the "bad actor" spouse.

Innocent Spouse Relief: Innocent spouse relief is a provision designed to protect taxpayers from unfair tax liabilities arising from their spouse's actions or omissions on a jointly filed tax return. To qualify for this relief, the innocent spouse must meet very specific criteria of timing, as well as knowledge and current marital status.

Here's an example of an Innocent Spouse situation:

Sarah and John are married and file a joint tax return. Unbeknownst to Sarah, John significantly underreports their income to reduce their tax liability. The IRS later discovers the discrepancy and audits the their tax return. Additional tax, penaties, and interest is assessed based on the underreporting. If Sarah can prove that she had no knowledge of John's actions and did not benefit from the underreported income, she MAY be eligible for innocent spouse relief. In this case, she won't be held PERSONALLY liable for the tax debt and related charges. This is a simple example and the criteria for Innocent Spouse Relief can be quite complex and involved.

Injured Spouse Relief: Injured spouse relief is different that innocent spouse. It is applicable when a jointly filed tax return results in an offset of a tax refund. A refund offset is when the IRS takes the full refund (or portion of the refund) to satisfy some lawful debt obligation that is owed by a taxpayer. This typically happens when one spouse has outstanding federal or state debts, such as unpaid taxes (that may have been incurred before the marriage), delinquent student loan payments, or unpaid child support. The injured spouse seeks to recover their share of the joint refund through the application of the injured spouse relief procedure.

Here's an example of an Injured Spouse situation:

Mark and Lisa, a married couple, file their taxes jointly. Mark has defaulted on his college student loans before his marriage, and as a result, the IRS withholds their entire tax refund to offset Mark's delinquent student loan payments. Lisa, however, has no part in Mark's student loan obligation and is rightfully entitled to her portion of the refund. In this scenario, Lisa can file for injured spouse relief to reclaim the portion of the tax refund that is rightfully hers.

Bottom line: Innocent spouse relief and injured spouse relief are statutory provisions offered by the IRS to protect taxpayers facing unique circumstances with their spouse or ex-spouse. Innocent spouse relief is for those who find themselves burdened by their spouse's "creative numbers" put on a joint tax return, while injured spouse relief is applicable when a jointly filed refund is withheld to cover the debt of one spouse.

Taxpayers should understand that by knowing the requirements of these two types of relief, they can make informed decisions and seek appropriate assistance when they are "colleterial damage" caught in the IRS web. As always, it's advisable to consult a qualified tax professional to ensure compliance with IRS regulations and determine eligibility for relief options.

Kevin Rego

Law Office of Kevin Rego

San Mateo, CA

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS TAX PROBLEMS: TAX COMPLIANCE AND THE 6 YEAR RULE

Thu, 27 Jul 2023 17:41:00 GMT

San Mateo, CA: Before you can propose a solution to your IRS tax problems, you must be in tax compliance with the IRS.

Clients rarely have just one year of tax problems to deal with. Often, IRS tax problems stretch over several years.

Please note that before you can apply for an IRS Collection alternative, you must be in tax compliance. That means:

But what if you haven't filed in several years?

Do you have to go back to the beginning of time to file your returns?

Happily, you will be pleased to know that GENERALLY the IRS requires only the past SIX YEARS of tax returns to be filed in order to be in compliance. Therefore, unless requested by the IRS, to get a collection alternative such as an Offer in Compromise, Installment Agreement, or Currently Non-Collectable status, only the past 6 years are needed to be filed.

Please realize it MAY be to your advantage to file older returns, especially if the IRS filed a substitute-for-return (SFR) for you.

Bottom line: You can't suddenly drop out of the sky with the IRS and start asking for special considerations when you have not filed tax returns in years. You must be in compliance so the IRS has the requisite knowledge of your tax situation to ensure you qualify for the collection alternative you are proposing.

Non-filers as well as those seeking collection alternatives should always consult with a tax professional to analyze the situation before making a plan. If you are in the greater San Francisco Bay Area, please feel free to contact me with any questions.

If you are not sure what you owe, for what years you owe, or even if you filed a tax return, reach out to me no matter where you live for a comprehensive IRS Transcript analysis . The solution to your tax problems begins with knowledge of your situation.

Kevin Rego

Law Office of Kevin Rego

SAN MATEO, CA

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

Knock..Knock?---it's not the IRS anymore.

Tue, 25 Jul 2023 16:10:00 GMT

San Mateo, CA: In a move that is probably long overdue, the IRS announced on 7/24/23 that it is ending its decades-long policy of IRS employees making unannounced visits to taxpayer's homes and businesses.

The IRS cited employee safety and combatting scammers who pose as IRS agents as the reason for the policy change. The policy was effective immediately according to a Treasury Department statement.

While opening the door to an IRS Revenue Officer who had a demand letter for back taxes due was certainly effective in gaining a taxpayer's attention, the risks to IRS employee safety simply outweighed the benefits.

Mind you, the home and business visits were not for trivial tax matters. In most situations, the taxpayer or business OWED SIGNIFICANT back taxes or had not filed their tax returns for SEVERAL YEARS with significant assets that the IRS couldn't help but notice. The door knocking was not for the "little guy" who had an unpaid tax bill.

Even with that, I believe this is a good thing for both the Service and taxpayers. Taxpayers are confused enough with scammers online and on the phone--when a scammer comes knocking with fake IRS credentials, how does the public stay protected?

In addition, there has been ALOT recently published about the "80,000 armed agents" the IRS was planning to hire with the passage of the Inflation Reduction Act late last year. People are scared that the IRS is "coming after them with guns". While this has been debunked by government officials, the fear remains.

Realize that field visits related to criminal tax activity is not covered in this policy change. The IRS federal agent that comes to your door with a badge and wishes to speak with you about some activity may not be a scammer.

Bottom line: the IRS will continue to make contact with taxpayers via US Mail (both regular and certified). As I have blogged before, the most important thing you can do with IRS mail is open it and don't ignore what they are asking for!

If you received IRS correspondence and you are confused and worried, seek out a tax professional who can help "decode" the letter and get you off the IRS radar as soon as possible.

Kevin Rego

Law Office of Kevin Rego

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

The IRS isn't always right!

Sat, 22 Jul 2023 17:00:17 GMT

IRS Penalty and Interest adjustments may be warranted

San Mateo, CA: The IRS is not always right on penalty assessments and interest charged on outstanding taxes. Beware!

Many taxpayers falsely think when it comes to income taxes, what the IRS says is correct! Well, that is not the case every time.

When a client has a tax bill that has been outstanding for a while OR is subject to a tax penalty (and there are ALOT OF PENALTIES), the IRS can often rack up HUGE additional charges to add to the underlying tax liability.

Many clients feel OK paying the taxes that they owe, but get very upset and angry at penalties and interest charged to their bills. To make matters even worse---the interest that is charged covers not only the tax but the penalty amount also!

The interest that is charges changes quarterly. Currently, the interest is 7%. Interest is compounded daily and can really add up fast!

Few things to remember:

Some penalties can be easily removed if you have a "clean" tax history and meet certain criteria. These are fall under the category of First Time Abatement penalties.
Be watchful on the interest that the IRS charges. The final tax bill should show the breakdown of the amounts of interest per tax period. If you owed taxes for a long time and a lot of interest accumulated, there could be different interest charged at different rates. The IRS is not always right--they make mistakes!!!
If you are facing large penalties and interest charges, you will want to have a tax professional take a look at the IRS bill. An independent analysis of your IRS transcript could save you quite a bit of money on your tax liability in the form of penalty abatement and interest adjustments.

Kevin Rego

Law Office of Kevin Rego

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

A bad Offer in Compromise (OIC) is worse than no OIC!

Fri, 21 Jul 2023 16:48:00 GMT

San Mateo, CA: What is worse than paying one of these pennies on the dollar Offer in Compromise rip-off companies? Paying Uncle Sam and being back at square one!

I often rail about these "late night offer in compromise" rip-off companies that promise to settle your tax debt for "pennies on the dollar". They make it sound like the IRS can't wait to take a fraction of the money you owe and simply let remaining debt go. Does that sound right to you?

Of course not. The Offer in Compromise (OIC) program is very much a case-by-case evaluation of your ability to pay your tax debt. Unforeseen circumstances can happen: a death in the family, a failing business, COVID-19 shutdowns, health problems and medical bills, etc. Tax payments don't live in a vacuum--they are part of the overall financial status of an individual or company.

Therefore, in order to settle your TAX OBLIGATION for less that you owe, a reasonable collection potential analysis is done by the IRS AND SHOULD BE DONE BY A TAX PROFESSIONAL REPRESENTING YOU! You should know going into the OIC application process what your chances are of successfully obtaining an OIC. Ultimately, it is up to the IRS to accept or deny your request, but a skilled and experienced tax attorney can give you a pretty good idea of your chances.

Well you say---forget that! Why waste my time! I will just pay one of these companies to apply for an OIC for me. If the IRS says no, they say no and I am only out the LARGE FEE I paid the rip-off company, right?

NOPE.

With your OIC, in addition to the fee you pay the rip-off artists, you pay the IRS also. With your OIC application, you must pay:

There are procedures for low-income certified tax payers that alter these rules, but suffice to say these rules will apply to most taxpayers applying for OIC.

The OIC program is a godsend to many taxpayers who find themselves in a hopeless situation due to unforeseen circumstances. To think of the OIC program as a way to skate your way past the IRS while thumbing your nose at them is a mistake. OIC is just one part of IRS collection alternatives that you should explore with the tax attorney who represents you. It might be right for you or it might be a bad choice. Know your options going into the collections arena with the IRS before you jump in.

If you have a question on collection alternative with the IRS OR you are not sure if you owe money to the IRS and need to find out without "kicking the hornet's nest" by calling them, my information is below.

Kevin Rego

Law Office of Kevin Rego

650.933.5222

Law Office of Kevin Rego

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

Extension Deadline coming fast. Advice: File your return!

Wed, 12 Jul 2023 23:37:00 GMT

San Mateo, CA. The deadline to file your 2022 federal tax return was, for most taxpayers, April 18, 2023 this year. If you filed an extension, the deadline will be October 16, 2023.

It is important to file your 2022 federal tax return EVEN IF YOU CANNOT PAY for a number of reasons:

Failing to file a tax return because you cannot pay the taxes due on the return is a bad strategy. It is much easier to work with the IRS on your collection alternatives when the tax returns are filed--in fact, if unfiled returns are noted on your tax account transcript, the IRS will generally not work with you until those back taxes are filed.

If you owe and you cannot afford to pay, contact a tax attorney who can help you with the collection alternative landscape. Contacting the IRS is also an option, but remember: Does the IRS really have your best interest in mind when working out a plan?

In my experience, the IRS's mission is to collect the most amount of money in the shortest period of time from taxpayers while staying with the bounds of the Taxpayer Bill of Rights .

There are too many nuances and case by case circumstances to go through in a short blog post. Your circumstances are unique and should be evaluated by a tax attorney before contacting the IRS. Go to the IRS with a plan, or the IRS will provide you with one that may not be the best for you.

If you have any questions about IRS collections, CSED expiration dates (such as: DO I STILL OWE THIS TAX BILL FROM 2011?, etc), or penalty relief, feel free to contact me at the email or phone number below.

Kevin Rego

Law Office of Kevin Rego

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

Guarding against Tax Preparer Fraud

Sun, 09 Jul 2023 20:08:00 GMT

San Mateo, CA: You might want to consider professional Tax Account Transcript Monitoring to make sure your returns are filed with the information you provided.

Most of us think of the professionals that prepare our annual tax returns are honest, hard-working, and trustworthy folks-otherwise, we would not go to them with our sensitive tax information.

But, what if that trust is misplaced? What if the tax professional we have prepare our tax returns goes rogue ? Who is on the hook?

I had a recent case that I would like to highlight here. It begs the need for the each taxpayer to be diligent in handling their tax affairs.

Taxpayer, call her Sue, went has been going to the same preparer, call him Andy, for 7 years. Never had a problem in the past--Andy is a great guy.

This year, Sue gets her copy of the tax return from Andy and everything is OK. Sue gets her refund, everything is good--just like every year.

An issue arises with Sue that she needs to contact the IRS regarding a different matter unrelated to the tax return. In speaking with the IRS representative, she finds out that there is information on her tax return that she was not aware of. IN FACT, Sue finds out that the refund was NOT just the amount she received in her bank account direct deposit, but there was a second "SPLIT ACCOUNT" that deposited a portion of her tax return refund into a bank account she did not recognize. The IRS cannot explain to her why this happened--only that it did. They refer her to the Taxpayer Advocate Service. The Taxpayer Advocate Service advised they were so backlogged it would be several weeks or months until someone could call her back.

Sue came to me for help. I pulled Sue's IRS account transcripts and immediately saw the issue. In comparing Sue's IRS return transcript with the copy she had been given by Andy, I saw huge discrepancies. I saw that Sue's deductions had been grossly increased and credits that Sue was not eligible for were taken on the return. I also saw that the refund was split into to different accounts---and the amounts that went into both accounts.

Sue got her expected refund, but her crooked tax preparer stole the bounty of refund given by the false deductions and false credits.

Bottom line: There is no place in the tax system for crooked preparers. This preparer not only stole from the government, he stole IN THE NAME OF SUE--hiding behind his client that he has a duty to represent properly.

It got me thinking how valuable I RS account transcript monitoring really is. I was able to immediately identify the fraud and we taking steps to not only fix the issue for Sue (realize--the IRS has no idea what happened here so Sue is on the hook until we can prove otherwise) but we are making sure that the IRS and other professional licensing organizations that Andy belongs to are apprised of the situation.

Who knows how many other unsuspecting Andy victims are out there? Andy had a storefront tax preparation service that served hundreds of clients. Sue had NO INDICATION based on her prior years of business with Andy that he would do this to her.

The point of my story: Beware and protect yourself. Sue would never have know that she was being used to defraud the government until she got the audit letter in the mail. By that time, she is not only fighting the IRS to prove her innocence, she is trying to figure out what happened.

This also area is also ripe with fraud with businesses being victimized by employee embezzlers who steal trust fund monies for employee benefits. But that is a blog story for another time!

If you suspect something just isn't right with your tax preparer, drop me an email or phone call and I will see if I can help.

Kevin Rego

Law Office of Kevin Rego

kevin@regotaxlaw.com

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

Are you committing fraud on your federal tax withholding?

Sun, 18 Jun 2023 20:16:00 GMT

San Mateo, CA: Use care when you fill out your federal withholding certificate (Form W-4) for your employer.

The W-4 is used by employers in withholding the correct amount of federal tax from your payroll wage income. The W-4 went through a complete revision in 2020 and remains a rich source of confusion amount taxpayers in exactly how to accurately fill out the form .

Here is what not to do:

DO NOT STATE ON THE W-4 THAT YOUR ARE EXEMPT FROM FEDERAL TAX UNLESS YOU ARE REALLY EXEMPT FROM FEDERAL TAX

This seems simple enough, but some taxpayers are slow-learners

A hard lesson was learned by a crane mechanic in a New Jersey when he decided to go EXEMPT on his W-4 with his his employer (thus having no federal taxes withheld) from 2014-2018. The taxpayer was a high-income earner because in those exempt years, his wage income was right around $1.5M. This resulted in a tax loss of around $375,000 according to the IRS.

To add to the madness, this taxpayer also decided not to file federal tax returns for those years either---I mean, why would you, right?

After a federal jury convicted this taxpayer of tax evasion and failing to file personal income tax returns, he faces a maximum of 5 years for tax evasion and one year for each count of willful failure to file a tax return. There are also sanctions of restitution, civil penalties, a period of supervised release when he exits federal prison.

What was a key piece of evidence used against him at trial? The taxpayer's signed and dated W-4 form from his employer showing that he was exempt from federal taxes. This was clear and knowing fraud.

While this is case may be an extreme example, it does bear a clear warning: Do not commit fraud on your W-4 by claiming your are exempt. Do not commit fraud on your W-4 by claiming inaccurate, unsupportable, and inflated deduction adjustments to lower the amount of federal taxes that are withheld by your employer.

If you are not sure about your W-4, the IRS publishes a tax withholding estimator to help taxpayers complete the withholding certificate.

Kevin W. Rego, Esq.

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS Collections Division ends their hibernation

Thu, 15 Jun 2023 20:35:00 GMT

San Mateo, CA: The IRS Collections Division says: "Bear with Us---letters are a-comin'"The IRS recently announced that certain collection notices that were paused during 2022 while the IRS caught up on a massive pandemic-related backlog will resume. IRS letters and notices began flowing out at the end of May and will continue at a managed pace through the Summer.Among

Divorce and Taxes---be aware and beware!

Wed, 14 Jun 2023 15:08:00 GMT

Divorce and Taxes--be aware and beware!

San Mateo, CA: Divorce often brings secrets to light when an unsuspecting spouse finds out he/she has as big tax problem.

Q: I am going through a divorce. I am finding out my spouse has been very deceptive in our marriage. Should I be concerned about our tax situation?

A: Absolutely you should be concerned!

Many clients come to me with a common situation. Their soon-to-be ex-spouse "always handled our taxes" without much input from my client. My client starts finding out about manipulation, betrayal, and secrets that started BEFORE the marriage broke apart.

How does this affect my client's tax situation:

Often, married couples file a joint federal tax return each year. This is especially true in the nine community property states. Also, generally, filing a joint return is better from a tax perspective due to phaseouts and disallowances on a married, filing separate tax return.

But, married filing jointly comes with a potential trap. When spouses file a joint return, each is "jointly and severally" liable for what is on that return. That means that EACH spouse can be responsible FOR THE WHOLE AMOUNT of tax due if the other spouse can't or won't pay the government.

Why is this important---let's get back to the deception and betrayal.

Do you see where this is going?

One of the first places to look for those hidden horrors in on your IRS transcript. The IRS transcript shows balances due, potential audit flags, whether returns were filed or not, and so on.

My first action when dealing with divorcing clients on the tax side is to pull a full report on both spouses to see what is on the IRS transcript. It is very difficult to hide from a full report showing what the IRS knows.

Once I do an analysis , my client can know they are well-informed with their tax situation while negotiating the divorce process. I often continue monitoring the client's tax return for a few years to ensure that everything is "clean" while the statute of limitation on examination and collections remains active on the "married years."

Beware and be aware when it comes to divorce and taxes---what is hidden from you may come back to leave a nasty bite.

Kevin W. Rego, Esq

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Disclaimer: The information provided is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your individual tax or legal situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in anyway establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual, written agreement.

IRS TRANSCRIPT MONITORING SERVICE--KNOW WHAT IS GOING ON BEHIND THE SCENES ON YOUR IRS ACCOUNT TRANSCRIPT!

Fri, 09 Jun 2023 19:59:00 GMT

San Mateo, CA:

The IRS maintains an account or record on each taxpayer. The record is called a transcript. The transcript shows a number of items and acts as a "scorecard" of what is going on with that taxpayer's account.

An IRS Account Transcript Monitoring Service is much like a credit monitoring service. If the IRS makes an entry on your account, the monitoring service sees that entry and alerts you to that event. It might be something benign, like a tax refund---or it might be a flag showing a pending examination of your tax return.

You get notified BEFORE the dreaded IRS letter comes in the mail . You are able to contact your return preparer or go over your self-prepared return to GET READY for what is coming.

Think of the IRS Account Transcript Monitoring Service as a piece of mind---like an insurance policy you have that you hope you never need!

Any questions or to get more information on this service, click below. I have been successfully monitoring taxpayers' IRS accounts for 5 years--fixing IRS problems before they become problems!

Kevin Rego

Law Office of Kevin Rego

www.regotaxlaw.com

650.933.5222

Employee Retention Credit (ERC) Fraud Alert

Fri, 09 Jun 2023 17:33:00 GMT

Many have heard the radio commercials advertising "up to $26,000 PER EMPLOYEE" for businesses who weathered the pandemic and kept employees working during a really tough time.

To break it down, the Employee Retention Credit (ERC) is a real program. It is a refundable tax credit designed for businesses who continued paying employee while shutdown due to the Covid-19 pandemic or had significant declines in gross receipts from 3/2020 to 12/31/2021.

I won't bore you with the details because this article is not about how to qualify for the ERC, it is about how to protect yourself and your business from getting scammed by promoters of the ERC scam.

Many businesses continue to have a hard time financially after the pandemic and associated labor slow-down. This makes "fertile ground" for scammers to prey upon unsuspecting business with promises of "free money" from the government.

Many of the scammers are basing the ERC claim on improper taxpayer data and conditions to "fit" the ERC guidelines for those businesses that might otherwise not qualify for the credit.

The IRS is warning businesses to be cautious of advertised schemes and direct solicitations promising tax savings that seem to good to be true. Scammers that charge large up front fees or large contingent fees based on the amount of your ERC refund may be a sign of a scam. Improperly claiming the ERC could result in YOU being on the hook to repay the improper credit, along with interest and penalties. When these scammer companies disappear, you are left holding the bag!

REMEMER: ULTIMATELY IT IS THE TAXPAYER THAT IS RESPONSIBLE FOR THE INFORMATION THAT IS ON YOUR TAX RETURNS AND DOCUMENTS FILED WITH THE IRS. DON'T FALSELY TRUST A SCAMMER WITH YOUR GOOD NAME AND REPUTATION. ASK QUESTIONS IF YOU DON'T UNDERSTAND!

If you are being audited or have been audited and feel you need legal representation we can help!

If you would like to know up to 6 months ahead of time if the IRS is planning to audit, we can monitor your IRS transcript. This unique service pulls back the curtain and let's us know what is going on behind the scenes.

Good luck and be suspicious!!!

Kevin W. Rego, Esq.

Law Office of Kevin Rego

650.933.5222

www.regotaxlaw.com

Disclaimer: The information provided is intended to provide a general overview about the topic presented. it is not intended to be a legal interpretation of your individual tax situation. If there is a conflict between the information provided here and any legal authority implementing or interpreting the subject matter, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not establish an attorney-client relationship. That relationship can only be accomplished with both parties signing an engagement agreement.

IRS identity protection PIN numbers can avoid ID Theft

Wed, 31 May 2023 17:53:15 GMT

IRS ID Theft PIN number is now available to all taxpayers.

San Mateo, CA: Here's the scenario: Your efiled tax return gets rejected by the IRS because your social security number has already been used on a filed tax return--now what? (this will be the subject of a future article!).

Well, let's back up a little bit---what can YOU DO NOW to protect yourself from tax scammers stealing your social security number? Answer: IRS ID THEFT PIN PROGRAM.

Taxpayers can go online, verify their ID to the IRS and obtain a 6 digit PIN number that must be recorded on their efiled tax return in order to get processed. Without the PIN number, the efiled return is automatically rejected.

Thus, scammers that steal your ID and social security number to file a fraudulent return and get federal tax credits using your name will be BLOCKED immediately from doing so.

For more information or to obtain a ID THEFT PIN go directly to the IRS website at:

ID THEFT PIN

and complete the process.

Remember, the PIN changes EACH TAX YEAR (you get a letter in the mail with the new PIN each tax season), so DO NOT LOSE THAT CURRENT PIN NUMBER. Treat it like any other important tax document.

If you think your ID was already stolen and/or you are being sent IRS letters for taxes you don't owe, consider getting a comprehensive IRS transcript report and have your IRS account monitored by a tax professional for any changes made by the IRS. This could include a tax return being filed without your knowledge or an upcoming IRS audit of your tax return.

Protection of your identification is important and deserves your protection! If you need assistance, let me know.

Kevin W. Rego, Esq .

Law Office of Kevin W. Rego

650.933.5222

www.regotaxlaw.com

The IRS makes a great offer for American's that owe taxes!

Sat, 21 Jan 2023 00:11:53 GMT

IRS Collections "pilot program" made permanent

Fresh off the IRS presses!

Darren Guillot, Deputy Commissioner, Small Business/Self Employed Division, Collection & Operations Support announced today in a post that the IRS's two year pilot program for streamlined collections implemented during COVID will be made permanent.

During the pandemic, flexible installment agreement terms were implemented by the IRS in an effort to help taxpayers who owed back federal taxes. The maximum amount of the total tax debt and the payment terms were increased in an effort to get more delinquent taxpayers back into tax compliance.

The program was such a success, that now the IRS is making the pilot program a permanent part of their collection alternatives.

What this means to you, the taxpayer who owes back taxes:

Individuals who owe $250,000 or less in assessed federal taxes can establish a payment plan without having to provide a extensive financial statements to the IRS;
The payment amounts must satisfy the total liability within the CSED (collections statute expiration date);
The taxpayer can establish terms of the payment agreement that are flexible to their own needs;
The taxpayer must be within Campus Collections (or Automated Collection System) and not be assigned to a Revenue Officer in the field.

Bottom Line: What the program allows is the flexibility of the taxpayer to set their own monthly payment amounts and resolved their tax debt within the time frame that works for them as long as it is within the statutory period (CSED).

There is a catch:

As stated by Mr. Guillot, the key is to be proactive and resolve your tax balance early--before enforcement begins and/or assignment to the Field Operations.

Once there is a Revenue Officer involved, the flexibility and higher allowed debt is off the table along with the limited disclosure of financial statements.

The IRS will also still seek to protect the interests of the United States by issuing a Notice of Federal Tax Lien if deemed appropriate. This policy has not changed.

But, to establish an installment agreement using your flexible terms with limited financial statements and the ability to sleep at night without worrying about waking up to an empty bank account is a good deal. If you owe back taxes, now is the time to get into a streamlined installment agreement!

Passport in Peril?

kevin@regotaxlaw.com (Kevin Rego) — Thu, 22 Dec 2022 00:40:29 GMT

The IRS and US Department of State are trying to get your attention, Mr. and Ms. Delinquent Taxpayer

Since early 2018, the IRS has been using a little known tax liability enforcement tool authorized under Internal Revenue Code 7345(a) to get the attention of taxpayers who owe money to the IRS but are not cooperating.

Section 7345(a) provides that if Treasury Department receives certification by the Commissioner that an individual has a seriously delinquent tax debt, such certification must be transmitted to the State Department for action with respect to denial, revocation, or limitation of a passport.

That's right---the IRS reports seriously delinquent taxpayers to the US Department of State who then take action against the taxpayer's passport status. What that effectively means is that the Department of State will generally deny an application for issuance or renewal of a passport from such individual, and may revoke or limit a passport previously issued to such individual. Apparently, the choice of action is up to them.

The definition of a “seriously delinquent tax debt” is an unpaid, legally enforceable, and assessed federal tax liability of an individual, greater than $50,000 (including tax, interest, and penalties indexed each year for inflation), and for which:

A notice of federal tax lien has been filed under section 6323, and the taxpayer’s right to a hearing under section 6320 has been exhausted or lapsed; or

A levy has been issued under section 6331.

The current debt amount as of 2022 is around $55,000 when adjusted for inflation.

The taxpayer will be notified that he/she is on the delinquent tax debt list by receipt of IRS Letter CP508-C. That letter explains the pending action against the taxpayer's passport status and gives them 30 days to respond. No response or no action to mitigate the situation will result in a certification to the US Department of State for action.

Who is NOT subject to the passport suspension/revocation? Taxpayer debt which is:

A debt that is being timely paid under an IRS-approved installment agreement;
A debt that is being timely paid under an offer in compromise accepted by the IRS;
A debt that is being timely paid under the terms of a settlement agreement with the Department of Justice;
A debt in connection with a levy for which collection is suspended because of a request for a due process hearing (or because such a request is pending) under section 6330; and
A debt for which collection is suspended because the individual made an innocent spouse election or the individual requested innocent spouse relief.

Bottom line---these even if your tax debt exceeds the $55,000, if you are WORKING with the IRS to resolve your debt, they will likely leave your passport alone. Ignore the IRS and you may find your next vacation will be limited to the United States, no Bon Voyage!

Unreported gambling winning income audits are on the rise

Mon, 19 Dec 2022 02:04:38 GMT

Here's the story:

A holiday weekend trip to one of the nearby casino's, a nice dinner, and some slot machine play for fun. Suddenly, the bells start ringing, the lights start flashing, and you are sitting there wondering what just happened.

Next comes the slot attendant and out comes your driver's license and social security card.

Questions begin in your mind: What is this? A IRS Form W-2G? Why are you giving me this right now? What do I do with this? Wait, I just won a jackpot!

I am seeing a rise in casual gambling audits (generally on unreported income audits) where taxpayers are not reporting their gambling winnings as income on their tax return. Let me lay out a few facts:

1. Gambling winnings, like most income, is subject to income tax.

2. When you receive a W-2G either at the casino or in the mail, do not ignore that form. It is reported to you AND to the IRS.

3. If you are more than a "casual" gambler who frequents casinos regularly, you should be keeping a win/loss log. You should also be "tracked" by the casino for their yearly win/loss report with a player's card or similar.

4. Just because you did not get a Form W-2G does not mean that gambling income is not taxable.

Keep in mind that while you need to report gambling winnings, gambling losses TO THE EXTENT OF THOSE WINNINGS may be deductible if you itemize your deductions on your tax return. If you take the standard deduction on your tax return, you lose the ability to deduct those gambling losses.

If you receive a notice in the mail from the IRS regarding unreported gambling winnings, do not ignore it. Do not hide it from your spouse. Do not put it in your underwear drawer with your other important papers that you don't want to deal with!

Gambling income audits can be easily mitigated with proper documentation and explanation to the IRS.

Failing to report your winnings puts you on the defense--go on offense and make sure you are properly reporting the income and taking the allowable deductions you can.

GOOD LUCK AT THE CASINO!!!!

Financial Disability in filing tax returns

Thu, 15 Dec 2022 02:02:12 GMT

The reality of life.

Sometimes, folks go through physical/mental heath events (whether acute or chronic) which causes their lives to really fall apart. Keeping up with bills, taking medications, and even taking care of basic daily needs becomes a challenge for those going through tough times.

Often, failing to file tax returns are among those items that go by the wayside. If the ill person owes money to the IRS, it is likely you would hear something from them in the form of collection letters. But what if a refund is due?

It is uncommon, if ever, for the IRS to notify a taxpayer that he/she should file a tax return to get a refund that is due to them. Unfortunately, the refund clock starts ticking when the the tax return is due---you only have 3 years from the due date of the tax return (or two years from the payment of tax) to request a refund. Otherwise, that refund is generally lost and the taxpayer is out the money he/she may desperately need.

Couple of ways to handle this:

1. If you know someone is in this bad situation, gently suggest that filing a tax return may be of benefit to him/her. If he/she cannot afford to pay for return preparation, there are IRS programs that might be able to help.

2. If it is too late to file the earlier returns and there is significant refunds that were lost, contact a tax attorney who may be able to help overcome the 3 year limitation with a financial disability request. This is a very specific legal argument that often leads to a battle with the IRS. But with the right facts, it may be worth it to the senior who would otherwise be out the money.

If things fall apart--proactive effort is needed!

Deadline looms for IRS efile

Thu, 03 Nov 2022 00:56:44 GMT

So, you have really procrastinated on doing your tax return---you filed an extension and that deadline has come and gone. Now what?

Well, the next deadline facing you have is 11/26/22 at 11:59 PM Eastern. That is the date when the Modernized efile Operation (MeF) shuts down at the IRS to allow for system upgrades/updates for the coming tax year 2022 tax season. The MeF system provides electronic filing and payment options for filers of Corporation, Employment Tax, Estates and Trusts, Excise Tax, Exempt Organization, Individual, and Partnership Tax Returns.

IRS DEADLINE

After 11/26/22, you will not be able to electronically file your 2021 federal income tax return until sometime near the end of January 2023. And with the IRS behind in processing about 5 million paper-filed returns, sending your tax return in the mail isn't a much better option.

If you owe money, that two-month processing delay can really add up with penalties and interest.

When it comes to filing a federal tax return, better late than never is the golden rule. But don't wait---get it done if you are still procrastinating!

What do you mean my cryptocurrency is taxed?

Thu, 13 Oct 2022 00:53:34 GMT

The intrigue of "anonymous" ownership of virtual currency (or cryptocurrency) has led many to believe this commodity is flying under the IRS's tax radar.

Nothing could be further from the truth.

Since 2015, IRS Criminal Investigation continues to build a cybercrime program and now has a cybercrime coordinating officer in each of CI's 21 field offices. CI notes in its annual report that crypto crime is a top priority for the immediate future. Efforts to expose those failing to report virtual currency transactions have led the IRS to issue "John Doe Summons" on virtual currency operators and brokers to obtain their customer lists. Thus far, the summons process has withstood challenges in federal courts around the country and the IRS is getting that customer information.

The IRS issued Notice 2014-21 in early 2014 which announced their position that virtual currency will be treated as property and general tax principles applicable to property transactions will apply to transactions using virtual currency. Virtual currency is NOT considered a foreign currency.

Thus, just like any item of property, generally, when you sell for a profit, you have a reportable capital gain. When you sell for a loss, you have a deductible capital loss subject to any limitations on capital losses.

The tricky part of virtual currency is often in determining the cost basis of your holdings. There are so many different transactions and fractions of a "coin" that often taxpayers are at a loss of exactly what they originally paid for the coin.

It is absolutely necessary that you maintain excellent purchase records since many of the brokerages that manage your virtual currency sales only report the gross proceeds from the sale (the sale price) and not your original purchase price. Without that original purchase price, you are unable to determine a profit or loss--and you may be paying income tax when you should have a deduction!

A brief IRS FAQ on virtual currency can be found at this link

https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions

Bottom line: if you are a virtual currency trader you should be familiar with the rules of the game. Report your transactions as required and you will have nothing to fear if the taxman comes calling.

The information above is intended to provide a general overview of the topic presented. It is not intended to be a legal interpretation of your tax situation. Always seek advice from a licensed professional when determining how this information affects you. This article does not in any way establish an attorney-client relationship. That relationship can only be accomplished with both parties signing a mutual agreement engagement letter .

the next "person" you talk to might be a robot...IRS

Tue, 05 Jul 2022 20:26:00 GMT

T he IRS is expanding its endeavors into the artificial intelligence universe by using "voice bots" as an option to answer taxpayers' questions when calling the IRS.

Let's be honest, the IRS could probably use the robotic help since a recent Taxpayer Advocate survey found that the IRS answers only about 1 in 10 phone calls into their call centers. A 10% answer rate is dismal at a best.

The voice bot system has been in use since January and has answered some 3 million phone calls from taxpayers. Currently, the voice bots are used to answer more "routine" questions and ID verifications on interactive voice responses. In addition, the bots have been deployed to answer frequently asked questions about Economic Impact Payments and Advanced Child Tax Credit issues for taxpayers.

The IRS sees the expansion of the voice bot program this year into other areas of taxpayer customer service including:

Taxpayer account and tax return transcripts
Tax payment history
Current tax balance due

Time will tell if the voice bot system is the answer to the IRS answering woes!

IRS Collections is not a "one-size fits all" proposition

Fri, 01 Jul 2022 21:54:00 GMT

Wouldn't it be nice if it was that simple?

You get into a little tax trouble because you failed to make quarterly payments on your business income, you had an unexpected bonus at year's end, or a serious medical issue arose with you or your family causing a disruption in your income---

These are all things I see frequently in my clients' lives. Wouldn't it be nice if you could just call the IRS and ask for the "Fresh Start Initiative" or get yourself on the "pay pennies on the dollar" tax payment plan?

Well, it would be nice, but it doesn't work that way. If it was that easy, NONE OF US would be paying our full tax liability each year. We would all be paying a fraction of our tax liability like these national tax resolution companies promise on late-night TV!

The IRS works on a system called "reasonable collection potential" or RCP. The IRS's job is to collect the most tax as quickly as possible from taxpayers who owe the government money. Using a financial analysis formula, the IRS can, on a case-by-case basis, reasonably predict the amount that they will be able to collect from a taxpayer within the time period allowed (usually 10 years from the date the tax is assessed).

Certainly there are boundaries and limits on what financial resources and corresponding amounts the IRS can quickly grab from taxpayer accounts. Knowing their strategies are critical in determining your RCP and coming up with a collection alternative proposal to the IRS.

"But I have a VERY GOOD REASON THAT I CANNOT PAY MY TAXES!"

I have found that the IRS is not really that interested in your personal story---YES, there are times when there are incredibly compelling circumstances of taxpayers who have involuntarily fallen on hard times --those may be considered by the Revenue Officer or collections representative. But generally speaking, the RCP formula will override all other details if the IRS thinks it can get paid in full.

Don't be fooled by the "pennies on the dollar" scam. Don't think that your personal situation will win the hearts and minds of the IRS. Ultimately, it may be the skill and knowledge of an experienced tax attorney who can advise and navigate you through the maze of IRS collections and arrive at a fair result---not an empty promise.

I represent clients in the greater San Francisco Bay Area and nationwide with IRS collections, examinations, IRS notices, and other post-filing tax compliance matters.

Note: The above information is intended to provide a general overview regarding the topic presented. It is not intended to be a legal interpretation of your individual tax situation. If there is a conflict between the information provided and any legal authority implementing or interpreting the topic, the legal authority shall prevail. Always seek legal advice from a licensed attorney. This article does not in any way establish an attorney-client relationship. That relationship can only exist with a contemporaneously signed agreement by both parties.

UPDATE BELOW: The IRS can't touch my social security income, right?

Tue, 28 Jun 2022 20:04:00 GMT

WRONG!!

Many clients believe that their social security retirement income is "sacred" and untouchable by the IRS to satisfy outstanding tax debts. In fact, the Federal Payment Levy Program (FPLP) can, and often does, levy 15% of taxpayers' Old Age and Survivor's Benefits as part of their automatic levy program authorized under Internal Revenue Code 6331(h). (SSA Disability Insurance Benefits (SSI) are generally not part of the automatic levy program).

What can be done?

First, you must respond to IRS collections notices. The WORST course of action is to ignore the past due tax debt---it will not go away.

Second, you have a right to have your matter heard by an IRS Appeals Officer prior to any levy action. This gives you an opportunity to be heard by an independent party to ensure your due process rights were followed by the IRS. However, following an unsuccessful appeal, the levy may commence.

The single best thing you can do is work out a collection alternative with the IRS.

It may consist of a lump sum payment to satisfy the tax debt, an installment agreement to pay off the debt over time, or it may be a "currently non-collectible" status request which will put your payments on hold based on your current financial situation.

Don't wait to receive the IRS Notice CP91 (intent to seize 15% of your social security).

Contact a tax professional to help you through the process and analyze your financial situation and work on your behalf with negotiating a resolution with the IRS.

UPDATE: In case this wasn't bad enough, I wanted to quickly share an Eleventh Circuit Court of Appeals decision from last year in Dean v. United States, No. 20-14421, 2021 WL 2689599, at *1 (11th Cir. June 30, 2021).

This is an unpublished case from the 11th Circuit Court of Appeals, but the result was severe to the plaintiff.

Essentially, the court found that EVEN THOUGH the 10-year statute for the collection of Mr. Dean's tax liability had expired, the levy on his Social Security Income was found to be a "fixed and determinable right to payment". Since the levy was placed PRIOR to the collection statute expiration, the levy on that income remained operative PAST the collection expiration date (CSED) and presumably could continue until full payment of the liability.

Don't let this happen to you or your friends/family/clients.

Work with a tax attorney to develop a plan before the worse case happens!

It's the "silent IRS lien" that may cause you to worry

Mon, 27 Jun 2022 00:34:00 GMT

Many real estate professionals are familiar with the Notice of Federal Tax Lien (NFTL) that sometimes shows up during a title search subsequent to a sale or refinance of real property. But did you know there was such a thing as a "silent" tax lien?

Internal Revenue Code 6332 is the authority of this so-called "silent tax lien". Essentially, the code states that a lien "shall arise at the time the assessment is made" and continues until the lien is satisfied or until the assessment becomes unenforceable by the lapse of collection time limits.

The "silent lien" comes into effect automatically without notice to anyone by operation of federal law. This is unlike the NFTL which is open and notorious. The NFTL is usually recorded on the delinquent taxpayer's real property title in the town or county of the taxpayer's residence.

Practically speaking, the IRS conducts its collection activity without much influence from IRC 6332. However, that section can come into play if there are competing creditors resulting in nasty surprises at very inopportune times.

Is there a silent lien on your account or your client's IRS account? The best way to know is with an IRS transcript analysis. "Pull" the IRS transcript and see what they have in their records, broken down by tax year. Check for balances due and check for expired or expiring collection statute expiration dates.

I offer a comprehensive IRS transcript analysis and report as a one-time service or ongoing IRS transcript monitoring. Monitoring can uncover IRS audits up to 3 months BEFORE the actual IRS audit notification or IRS notice in your mailbox.

As always, if you would like more information on how to avoid liens and levies in the first place, email me and we can discuss your individual tax situation.

Get Certain Penalties Reversed and Refunded from the IRS

Tue, 14 Dec 2021 17:16:06 GMT

Do you have hidden money in your IRS account?

Since 2005, the IRS has offered taxpayers a unique opportunity to lower some penalties assessed on their unpaid taxes. The qualifications are strict, but the savings can add up to thousands of dollars for taxpayers who are in payment plans or have paid their balances.

Known as First Time Penalty Abatement (FTA), the IRS is authorized to remove individual taxpayer penalties related to Failure to Pay your taxes on time or Failure to File your taxes by the due date. This is not a multi year offer--the abatement applies to a single tax year.

To qualify, taxpayers must not have been previously assessed other significant tax within the past three years. Also, the taxpayer must be in compliance with all filing and payment requirement at the time the FTA is requested.

We have a method to AUTOMATICALLY CHECK to see if you have FTA eligibility on prior year tax returns as part of our tax transcript monitoring system. If you have FTA eligibility, you can hire us to contact the IRS to request a refund for you. Get a BONUS REFUND from the IRS that you didn't even know you had coming!

Use the CONTACT US button on our website or email: kevin@regotaxlaw.com to find out about our tax transcript monitoring service today!

The Most Dangerous Thing You Can Do with the IRS

Thu, 11 Nov 2021 17:10:27 GMT

Here you go again---You head to the mailbox and there is another letter from the IRS. Just like with last month's IRS letter, you go into a paralyzing panic, and put the unopened letter on a pile with all of the other unopened letters from the IRS. CAUTION: Ignoring the IRS is a huge financial health hazard. Unlike fine wine, nothing in the tax world gets better with time.

One of the most dangerous things you can do is ignore the IRS . The IRS interprets your silence as non-cooperation and a failure to take your responsibilities as a taxpayer seriously. Tax problems do not go away by ignoring them---they get worse and worse as the IRS uses its tools to ratchet up the pressure to get into tax compliance. One day you will wake up to a zero balance bank account or an email from your employer letting you know the IRS has garnished your wages.

The best way to interact with the IRS is to hire a tax professional to help you get back on track with the IRS. If you can't pay your taxes right now, ignoring the IRS won't help! Let's do a financial analysis and see if you qualify for currently non-collectible status (CNC). Let's see if you qualify for a payment plan or get you caught up on unfiled tax returns so we can negotiate an offer in compromise. There are many tools we can use to solve your tax nightmares.

If you have unopened mail from the IRS, contact me so we can see what is going on and make a plan to get back on track with the IRS. I am located in San Mateo, CA (San Francisco Bay Area) but serve clients in the greater northern CA and nationwide! I am available for phone or email consultations. Call or email today!

Can I Pause My Tax Payments to the IRS?

Mon, 01 Nov 2021 16:00:19 GMT

Let's say you owe the IRS money for some past tax liabilities. You know, based on your life's current circumstances, that there is no way that you can make good on the payments that you owe. What can you do?

Well, the absolute worst thing you can do is: NOTHING. As we have discussed in previous blogs, when you do nothing, the IRS feels that you are ignoring and avoiding them, so their financial "claws" come out. The IRS will ratchet up the financial pain until they get your attention.

What if you know you have to pay, but there is just no money left at the end of the month to send to the government?

"It is possible to put your payments on pause if you can prove the payments would cause a financial hardship and leave you unable to pay for your basic living expenses. Such a situation may result in a Currently Not Collectible (CNC) status of your IRS account.

If the IRS agrees with your hardship, collection by the IRS may be delayed until your financial situation improves. Your tax debt is not cancelled, but collection activity (such as levy of your bank accounts or wages) will generally stop. This gives you some breathing room to hopefully get back on your feet and begin making payments again when your circumstances improve.

Note: the IRS generally won't simply take your word that you cannot pay. They will require proof in the form of financial records and a request for CNC status must be properly made to an IRS Collections representative.

The IRS will revisit your financial condition periodically to see if you have regained your financial footing enough to begin payments. It is important to keep filing your tax returns to remain in compliance with federal tax laws.

We hope this never happens to you, but if you can't make your IRS payments, contact an experienced tax professional like us who specialize in IRS collection matters to assess your financial hardship and offer a comprehensive plan to deal with the IRS.

To CONTACT US email: kevin@regotaxlaw.com or visit www.myirstranscript.com to find out more about our tax transcript monitoring service today! We are located in San Mateo, CA and serve the greater Northern California area as well as nationwide!

Law Office of Kevin Rego

TERMS AND CONDITIONS

Terms and Conditions of Messaging

IRS TAX PROBLEMS: SERIES CP59 NOTICES COMING OUT

WHAT TO LOOKOUT FOR IN A CP59 NOTICE

IRS CP59, CP59R, and CP59SN Notices:

What They Mean and How to Respond

What should you do if you get a CP59 series notice?

Need Help Responding to an IRS CP59 Notice?

IRS Tax Problems: Incorrect balance due notices

IRS Payment Processing Delays: What taxpayers need to know

THE CP14 DEMAND FOR PAYMENT

'tis the season for CP 14 notices to taxpayers

What the CP14 Means

What You Can Do

Why It Matters

IRS installment agreements and incurring more tax debt

IRS Installment Agreements: How to handle more tax debt!

Question:

Answer:

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A "Double-Claimed" Dependent leads to a Double Audit for Parents

CLAIMING A DEPENDENT AFTER DIVORCE

The Heart of the Matter: Who Can Claim the Child?

Key Legal Principles at Play

Tie-Breaker Rules and Noncustodial Parents

Impact on Child Tax Credit-She lost that one too!

What This Means for You

IRS Tax Problems: Getting a "refresher" notice from the IRS

San Mateo, CA:

IRS TAX PROBLEMS: Gambling Winnings continue to interest the IRS

San Mateo, CA: IRS to Pursue Unreported Gambling Winnings: Potentially $1 Billion+ Income Tax Revenue

IRS Tax Problems: When your spouse's debt problems become your debt problems!

San Mateo, CA: It often happens to those that are newly married but can happen to any couple; debts owed by one spouse comes back to "haunt" the non-liable spouse who may not even know about these "skeletons". It can really damage a relationship---but there is a solution.

Understanding IRS Injured Spouse Relief and Refund Offsets

IRS Tax Problems: Monthly expenses: Actual vs. Allowable

IRS Tax Problems: Intent to terminate your payment plan

San Mateo, CA: It was stressful but you were able to work out a payment plan (know as an installment agreement) with the IRS. Then comes an IRS Notice CP523--Intent to terminate your installment agreement along with a hefty bill. NOW WHAT DO YOU DO?

Understanding the IRS Notice: Intent to Terminate Installment Agreement

IRS TAX PROBLEMS: Did you get an unexpected tax bill?

San Mateo, CA: The IRS initially sends taxpayers their unpaid "tax bills" on a Notice called a CP14.

What’s Happening with IRS CP14 Notices?

I paid my taxes but still got the CP14--Now what?

Conclusion

IRS TAX PROBLEMS: Disorganization is no defense in Tax Court!

Tax Court did not find a disorganized "shoebox" compelling which leads to a big liability

IRS Tax Problems: The IRS didn't even listen to me!

San Mateo, CA: What if you get audited (or a notice in the mail) and the IRS never even considered your side of the story?

IRS Tax Problems: Will my IRS tax debt ever go away?

San Mateo, CA: YES---your tax debt has a built-in "sunset" clause and does not live forever!

IRS Tax Problems: What happens if I don't file my taxes?

You haven't filed a tax return in years and nothing has happened---yet!

SAN MATEO, CA: The dreaded letter from the IRS arrives at the worst possible time. You are making holiday plans, the kids are busy in school, and work is out of control. NOW WHAT???

Here are some important points of what to look for on that IRS letter:

IRS TAX PROBLEMS: FRAUD LEADS TO TAX CREDIT MORATORIUM

San Mateo, CA: A somewhat controversial tax credit, the Employee Retention Credit (ERC), was put on a "timeout" today by the IRS. No new ERC claims will be processed from now until the end of the year .

IRS OFFER IN COMPROMISE-DOUBT AS TO LIABILITY AND AUDIT RECONSIDERATION AS TOOLS TO SOLVE YOUR TAX PROBLEMS

SAN MATEO, CA: Navigating IRS Issues: Offer in Compromise (Doubt as to Liability) vs. Audit Reconsideration

Offer in Compromise (Doubt as to Liability)

Audit Reconsideration

What's the difference?

Which one should you choose?

Your choice depends on your situation. If you're confident in the inaccuracy of the IRS's assessment, Offer in Compromise with doubt as to liability might be your solution. If you've already been audited and believe it was unfair, Audit Reconsideration provides an opportunity to present your case.

Not sure?

Kevin Rego

IRS Tax Problems: The Consequences of Not Filing A Federal Tax Return

San Mateo, CA: Are you aware of the potential consequences if you fail to file your federal tax return by the due date or extension date?

1. Failure to File Penalty:

One of the most critical consequences of not filing your tax return on time is the failure to file penalty. This penalty is imposed by the IRS automatically as a way to encourage timely filing.

2. Substitute for Return (SFR):

Why Seek Help:

IRS Tax Problems: Navigating tax issues properly

San Mateo, CA: The information source where you get your tax advice may be critical when dealing with the IRS.

IRS Tax Problems: Relief from your spouse's mistakes!

San Mateo, CA: Tax matters can be complex, and for some individuals, unforeseen circumstances can lead to confusion and potential tax liabilities.

IRS TAX PROBLEMS: TAX COMPLIANCE AND THE 6 YEAR RULE

San Mateo, CA: Before you can propose a solution to your IRS tax problems, you must be in tax compliance with the IRS.

Knock..Knock?---it's not the IRS anymore.

San Mateo, CA: In a move that is probably long overdue, the IRS announced on 7/24/23 that it is ending its decades-long policy of IRS employees making unannounced visits to taxpayer's homes and businesses.

The IRS isn't always right!