JULY 2015: We had a very successful resolution of a complex employment tax audit last week. The client, who had two S corporations, was assessed over $140,000 by the examining agent. The client retained us to file an appeal, and we also attended the appeals hearing. At the hearing, we settled the case, and the client will pay a total of less than $10,000 for both corporations.
JUNE 2015: We were recently successful in getting the Internal Revenue Service to place another client into “Currently Not Collectible” status. Although he owes in excess of $100,000, the client will not need to make any payments for the indefinite future, and will not have to worry about the IRS seizing his bank accounts or salary. This is a perfect resolution for a person or business that cannot pay back taxes, but, for one reason or another, does not qualify for an Offer in Compromise.
MAY 2015: This has been a big week for our firm and a couple of our clients. Mr. Cohen secured releases of two IRS levies totaling in excess of $1 million in the past two days. Although the two cases are very different, the key is to understand what the IRS is unhappy with, if possible, and to convince them that the client will be very cooperative in the future.
April 2015: We have recently placed another Atlanta client into the IRS’ OVDP program for foreign bank accounts. There are several variations of participation in the program, which is geared toward giving the taxpayer assurance that he will not be criminally prosecuted for failure to disclose foreign or offshore bank accounts and assets. Although the IRS is understaffed in many departments, they continue to emphasize their intention to put long term FBAR non-filers into jail. Anyone with a foreign bank account having a balance over $10,000 needs to know their options and reporting obligations at this point.
MARCH 2015: Using a legal argument based on the statute of limitations, Mr. Cohen was able to save a client over $145,000. Because the IRS attempted to assess the Trust Fund Recovery Penalty against the owner of a business more than three years after the business’ employment tax returns were filed, we successfully argued that the assessment was too late.
FEBRUARY 2015: So far this year, Mr. Cohen has secured “Currently Not Collectible” status for three clients. This is a resolution of a tax case where the IRS agrees that the taxpayer cannot afford monthly payments, and agrees that despite how much the taxpayer/client owes in back taxes, they will leave him or it alone and stop collection efforts for a few years. This gives the client breathing room, and comfort that their business, assets, and wages will not be seized. Although it is not easy to get into this category with the IRS, if the numbers and financial statement support it, the monthly payment can be brought down to zero.
NOVEMBER 2014: Over a year ago the Georgia Department of Revenue seized (yes, they simply took the money!) over $300,000 from our client’s investment account. She was a widow, and the money had been owed by her late husband’s business. When the Department refused to listen to our argument that our client had nothing to do with it, our firm filed a lawsuit on her behalf against the Department of Revenue. Just before going to a full trial, Mr. Cohen and a firm partner negotiated a settlement with the State of Georgia in which they gave half of the money back to our client.
SEPTEMBER 2014: In another Innocent Spouse case in which the Internal Revenue Service wanted almost $200,000, Mr. Cohen successfully negotiated a Tax Court settlement of $30,000 for the ex-wife. In this case the ex-wife client did sign the tax return, but we were able to prove that she was unaware of many of the items of unreported income and unsubstantiated deductions.
JULY 2014: We just finished up an audit of a business by the IRS. Because the client was able to retrieve a large volume of its records and banks statements, and we got them in very good order for the Revenue Agent, the IRS conceded 90 percent of the proposed tax. Not every audit of businesses and individuals has such good results (although we have on occasion secured additional refunds when the records are available), but taxpayers should not fear a letter from the IRS telling them that their return has been selected for examination.
MAY 2014: Mr. Cohen conducted a full Tax Court trial against the Internal Revenue Service in an Innocent Spouse case. Our client was abused by the ex-spouse, left the house, and never even signed a tax return. The IRS never relented, and the client decided to have her day in court. The judge held that indeed no joint return was filed, and the client therefore was not liable for the large amount her ex-husband owed from his tax return. The lesson in this case, as in so many, is that just because the IRS takes a position, and sticks to it, does not mean they are right.
October 2013: As the government shutdown finishes a second week, we are seeing and hearing of several tax related emergencies. One new client in particular had his wages levied by the IRS just before the shutdown, and there is literally nobody that we can call or fax to attempt to get the levy lifted. This is a process that can sometimes take as little as two days, yet this unfortunate man (who owes much less than the levy suggests he does) has to suffer because certain Congressmen are throwing an ego tantrum. The National Taxpayer Advocate is also out of work, so neither we, nor our Senatorial contact, has anyone to call on to break through the nightmare. The IRS put out a policy on not issuing levies during this “Lapse in Appropriations,” but they inexcusably omitted any authority to stop levies that were issued just beforehand. Please call our office if you are experiencing problems due to the shutdown, and we will try to advise you.
September 2013: When our firm represents clients in an IRS matter, we submit a power of attorney, and the IRS is required to contact us, rather than the taxpayer, whenever they need to discuss the matter. Not infrequently I find out that the Revenue Officer has either been sloppy or lazy, and has contacted the taxpayer/client rather than me. A recent IRS report has confirmed that this happens regularly, and that they may try to remedy their mistakes. As always, I recommend to our clients that they never talk to an IRS agent who calls or comes by their house or business—they should just get their name and number, and tell the Revenue Officer to contact me!
August 2013: Audits are up and going higher! The IRS has long known that they make good money, and have a winning record, when they audit taxpayers. Now, in a recent IRS report, they have announced that they will increase their use of the Correspondence Audit. This type of audit is handled by mail, and can result in complications and injustice if not handled promptly and correctly. We recommend that any client or taxpayer receiving written notice of an examination from the IRS contact us in order to have us properly coordinate the response, and ensure that the IRS does not assess extra tax when it shouldn’t.
APRIL 2013: We just finished a Tax Court case in which our client won a 100 percent victory! The client operates two different businesses, and after an audit of two years the IRS assessed him with a very large tax bill. This was one of those rare cases where we were able to prove every single deduction, and found persuasive case law supporting our client’s deductions and timing issues. This case is also a wonderful example of a taxpayer keeping excellent records, and not giving up when the IRS wins the first round.
April 2013: The IRS has recently published its Delinquent Collection Activities statistics for 2012. For those of you who have recently filed, or plan to file, an Offer in Compromise, the news is good: the number of Offers last year which were accepted by the IRS increased over 2011 by 20 percent! As you may be aware, because of a change in regulations last year, our office has filed many more Offers than we have in years, and have experienced a significant increase in accepted Offers. This is encouraging, and we will continue to file Offers for clients who appear to be good candidates for this program. (Unlike the tax resolution companies that advertise incessantly on TV, we will only submit an Offer for you if you appear to qualify under the IRS formula.) Also in the statistics, the number of levies issued by the IRS on taxpayers’ employers and banks has decreased a bit. However, if you were one of the 3 million people who were subjected to one of these, it was not good news.
March 2013: So many people are shocked to learn that if one of their debts is cancelled or forgiven, it will be considered taxable income by the IRS. If your house is foreclosed, a credit card debt is reduced, or a business loan is uncollectible, the taxpayer may receive a Form 1099-C in the mail from the creditor. Although the cancelled amount must be reported as income, there are several exceptions which we can help clients take advantage of. The key is to contact us as soon as you receive notice of the debt cancellation income so we can determine if one of the exceptions can be used to help you avoid the tax. A recent article further explains how this surprising concept works.
JANUARY 2013: We are proud that we were able to negotiate a wonderful Offer in Compromise for one of our clients last week. On a debt that exceeded $70,000, the IRS finally accepted our offer of $1000. While such low settlements are very rare (the commercials we see on television are fictional) the Offer in Compromise program has been revamped, and we encourage anyone who thinks they may be a candidate for an Offer to call to discuss their situation.
January 2013: Do you believe that you have certain rights as a Taxpayer? Do you know what those rights are? If you are a client of our firm, you have surely learned that you indeed have legal rights, especially to appeal certain IRS actions. Even if the IRS does not seem to realize what the law is or act as though Taxpayers have rights, we continuously advocate for our clients’ interests when dealing with the IRS or Georgia Department of Revenue. This blog by the National Taxpayer Advocate shows that a large number of Taxpayers think they have few rights, and do not know what they are.
October 2012: We just completed a full trial in front of the U.S. Tax Court. It was an “Innocent Spouse” case in which our client was attempting to avoid liability for tax incurred by her former husband when he withdrew his IRA and put the funds into his failing business. Of course our client had voluntarily signed the original joint tax return when she was married and the funds were withdrawn, but didn’t think twice about what the future would hold for her marriage or for her financial and tax situations. Although the Tax Court may indeed overrule the IRS on the innocent spouse issue and relieve our client of liability, all taxpayers with shaky marriages or less-than-honest spouses should reconsider before signing joint income tax returns. Mr. Cohen would be happy to discuss this issue with you should you have doubts about a tax return that is put in front of you for your signature.
July 31 2012: A big victory for our firm against the Georgia Department of Revenue was announced last week! The Georgia Court of Appeals upheld our favorable ruling from the Fulton County Superior Court that our client was not liable for the Trust Fund Recovery Penalty. This case has been going on for over five years, as the Department of Revenue just did not want to concede that it was wrong in trying to collect unpaid withholding taxes from our client, a minority shareholder and manager of a restaurant. You can read the opinion here.
July 2012: The recently revised IRS Offer in Compromise program appears at first glance to be working. Mr. Cohen has just successfully appealed the denial of an Offer that was considered and rejected initially under the old IRS rules. Arguing on behalf of a client with a brain injury, he convinced the Appeals Office to accept the Offer due to reduced future earning capacity, as well as special circumstances. Although rare, this shows that an 8 percent Offer can be accepted if the circumstances fall within the new IRS guidelines. We continue, however, to be skeptical regarding Offers, and will file them for clients only when they have a good chance of succeeding
June 2012: It has been a wonderful month for a few of Mr. Cohen’s clients. One had an assessment of $85,000, and we petitioned for an audit reconsideration. After working with the IRS and producing a great deal of paperwork, the taxpayer actually is now due a refund of $31,000 for that year. Another client had a large tax bill, and a large penalty. We filed a penalty abatement request with the IRS, and they agreed to eliminate the $64,000 late filing penalty. Finally, a taxpayer came to us with a $1.2 million dollar assessment. We filed a Tax Court petition, and were successful in getting that year’s bill down to zero!
June 2012: Great news for all taxpayers who can’t pay their taxes, or who have had an Offer in Compromise rejected in the past. The IRS has recently revised its Offer in Compromise program to allow significantly more expenses to be deducted, and we have no doubt that it will increase the chance that reasonable offers will be accepted. The News Release allows new deductions such as state tax payments, student loan repayments, and certain credit card payments. It also greatly reduces the future income calculations, all of which will make it easier to agree on a lower, satisfactory compromise number. We have just submitted two offers under the new program, and eagerly await the results. Please call Mr. Cohen if you would like to discuss how the new Offer in Compromise program might benefit you.
May 2012: Mr. Cohen had a major victory in a Trust Fund Recovery Penalty case in the Atlanta area. The IRS had proposed a multi-million dollar civil penalty against a family member of a large business owner when the business fell far behind in its withholding taxes. Focusing on his client’s lack of ultimate control over the business finances, he was able to convince the Service that this particular case did not meet the requirements of the Internal Revenue Code and regulations for imposition of the penalty on her personally. All people who are associated with businesses that withhold taxes, especially people who sign checks and make any financial decisions, should be very careful, and seek counsel, if they believe that the business might have a tax issue.
April 2012: The U.S. Senate is now considering new legislation that would give tax attorneys one more tool to use in having business levies released. Although our firm has had great success in getting IRS levies on business bank accounts removed, it is typically a matter of absolute discretion with the IRS. If this legislation is passed, the IRS would be required to consider the economic hardship that the levy would impose upon the business. This type of information is already part of the consideration in the release of personal levies, and we will continue to employ every reasonable argument when representing businesses who are caught in the collection process.
March 2012: The IRS has announced a new expansion of its “Fresh Start” initiative, which will give taxpayers who want relief from collection efforts more options to fit into a payment plan or resolution of their problems. They will now consider relief from late payment penalties, and have eased the guidelines for qualifying for an Installment Agreement and Offer in Compromise. Please call Mr. Cohen to discuss how this initiative might make it easier for you to resolve your case.
March 2012: We have seen a growing number of audits by the IRS on returns which have overstated, fabricated deductions. In all cases, the taxpayer did not even know the return preparer had manufactured the numbers, and had simply been happy to get a refund. Our challenge in these cases is to prevent the fraud penalty from being asserted, and to get the fairest treatment possible for a taxpayer who did not know he was a victim of preparer fraud. Please choose your return preparers carefully, and call us if the numbers on your return seem too good to be true.
February 2012: Mr. Cohen was honored to be listed among Georgia’s Top Rated Lawyers in Taxation by the publishers of LexisNexis Martindale-Hubbell, based upon peer review ratings.
January 2012: Bad news for taxpayers, as well as those who don’t pay their taxes! The Internal Revenue Service annual report shows that the numer of audits were up again last year, as were the number of levies and seizures. The IRS believes that there is only approximately 85 percent compliance among American taxpayers, and is flexing its enforcement muscles as expected. Because of this noncompliance by taxpayers, the IRS believes there is a $450 Billion tax gap annually.
December 2011: Are you thinking about selling your business? Buying a business? Using a business broker? So many clients go through a complex learning process when considering the countless factors involved in acquiring or selling an existing business. A recent New York Times column lists several blogs and sources for good information to help business owners (and potential owners) make the right decision for them. Remember to contact Mr. Cohen prior to signing any type of letter of intent or purchase contract.
November 2011: Mr. Cohen recently secured the release of a salary and investment account levy from the IRS for $2.4 million in less than a week. He was able to convince the IRS to take other collateral, while offering proof that the client/Taxpayer owed only a fraction of what the IRS claimed. The Taxpayer now has his funds back, his reputation restored, and his account with the IRS is corrected and in good standing.
November 2011: We just successfully completed an Offer in Compromise for a client with the Georgia Department of Revenue. While this was a big relief for the client, who did settle for “pennies on the dollar,” we continue to be very skeptical in filing such Offers. The vast majority of IRS and Georgia Offers are rejected, and we remind clients that the television advertisements you constantly see are extremely misleading.
October 2011: Many businesses incorrectly treat their employees as independent contractors, or “1099 employees,” thereby avoiding paying certain social security taxes on their behalf. An audit by the IRS can result in painful penalties for such worker misclassification. In general, if your “contractors” work only for you or on your projects or at your direction, they likely should be treated for tax purposes as employees, and taxes withheld from their paychecks. The IRS has announced a new program allowing companies to change their worker classification and avoid most penalties and back taxes. Call us to discuss how your company might take advantage of the Voluntary Classification Settlement Program.
September 2011: IRS criminal investigations have significantly increased! A recent report shows that the Criminal Investigation Division began over 12 percent more investigations of taxpayers last year alone. The government’s conviction/incarceration rate remains at over 80 percent. Remember, do not speak with a Special Agent, and call our office at once if you are contacted by the Criminal Investigation Division.
August 2011: Good news for those taxpayers/clients who owe taxes to the Internal Revenue Service. The IRS has reduced the annual interest rate on back taxes down to three percent! Please remember, however, that the Georgia Department of Revenue does not let market conditions affect their interest rate on past due taxes: the Georgia interest rate remains at twelve percent.
July 2011: The Internal Revenue Service has loosened the restrictions for Innocent Spouse cases. No longer will our clients who want to be relieved of the tax liabilities of their former spouses be forced to file their Innocent Spouse claims within two years of the first IRS collection notice. Potential clients should of course contact us immediately if they feel something is not right with their spouse’s tax returns or financial dealings.
July 2011: The Fulton County Daily Report, the major legal newspaper for the Atlanta Metropolitan area, has published an article on our recent victory against the Georgia Department of Revenue.
June 2011: MAJOR NEWS FOR COHEN, COOPER, ESTEP & ALLEN: After a three year battle with the Georgia Department of Revenue, Mr. Cohen won a victory in Fulton County Superior Court. The judge held that the Georgia DOR may not assess the Trust Fund Recovery Penalty against our client who managed, but did not control, a restaurant. In addition to this being a major tax savings to our client, it showed that it is possible to successfully stand up to unfair collection tactics by the Government.
June 2011: For those who have foreign/offshore bank accounts and wish to get back into the system without criminal repercussions and huge civil penalties, the IRS has extended the August 31 deadline for the 2011 Offshore Voluntary Disclosure Initiative by thirty days. We have represented several people in successfully taking advantage of this limited time offer.
May 2011: The Innocent Spouse provisions of the tax code are sometimes the only way a divorced or widowed person can escape from the tax liabilities created by their divorced or deceased spouse. Many attorneys believe, however, that the IRS unfairly applies this law to make it too restrictive, thereby saddling truly “innocent” spouses with tax liabilities that they should not in all fairness have to pay. Several U.S. Senators have recently signed a letter to the IRS Commissioner asking that the IRS review its Innocent Spouse regulations. We of course remain hopeful that the Innocent Spouse rules will someday become easier to qualify under, and will continue to press hard to get relief for our clients using existing regulations.
May 2011: Beware of tax resolution companies. Countless clients of our firm have previously hired the firms they see advertising on television, only to be disappointed with their lack of professionalism and level of communication. A popular tax resolution company has just been successfully sued by the Texas Attorney General.
April 2011: The Internal Revenue Service has announced that audits of taxpayers are up this year. The Wall Street Journal on April 4 reported that audits were up significantly during the most recent fiscal year, especially for six-figure earners.
March 2011: Due to the fact that the Georgia Department of Revenue has garnished the wages and seized bank accounts of so many Georgians, and has not instituted a workable repayment program, Mr. Cohen recently wrote a letter to Georgia’s new Commissioner of Revenue, offering suggestions to make the program fair to Georgia taxpayers.
February 2011: The Internal Revenue Service has recently issued a new Offshore Voluntary Disclosure program. This will encourage taxpayers with foreign bank accounts to disclose the accounts, pay a penalty, and get back into the system without the fear of criminal prosecution. Please call Mr. Cohen to discuss how you can take advantage of this new program.