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May 2012 Archives

California residents with high tax debts could lose passports

Two weeks ago, we noted the legislation proposed by U.S. Senators Bob Casey and Charles Schumer designed to address the increasing number of Americans who are renouncing their citizenship. That bill would increase the penalties on those whom the Internal Revenue Service deems to have given up their passports to engage in tax evasion.

Tax audits rise as states seek additional sources of tax revenue

California residents know our state's budget deficit troubles all too well. While California's deficit is quite large, other states are experiencing problems similar in kind, though much smaller in degree. Under pressure from some constituents not to raise taxes, some state governments are instead relying on increased tax enforcement to gather much needed revenue.

Prostitution-related charge lands former IRS agent in prison

You can't take a California woman across state lines to engage in prostitution. That's the lesson learned by a former agent of the Internal Revenue Service, who was sentenced earlier this year to two years in prison for that very act. He entered a plea agreement last November, voluntarily disclosing his participation in the crime.

Fresh Start program makes changes to offers in compromise

A number of prior posts on this blog have mentioned the changes implemented by the Internal Revenue Service under its "Fresh Start" program, which contains a number of measures aimed at helping people pay their tax bills. This week, the IRS has announced further modifications to Fresh Start, in particular making taxpayer-friendly improvements to the offer in compromise program.

Congress takes action to preclude offshore tax evasion

Orange County residents cannot help but notice the increasing financial buzz surrounding Facebook these days. The billions raised by the company's initial public offering are generating a wave of media attention. But the tax issues concerning one of the company's co-founders has also received wide publication in the press.

Taxpayer loses legal argument over word in offer in compromise

Some California taxpayers with significant tax debts may have entered into--or contemplated entering into--an offer in compromise with the Internal Revenue Service. An OIC is the exclusive way for taxpayers to satisfy their debts with the IRS for less than the total amount owed. But the amount offered to settle the debt and any additional terms that become part of the agreement are vitally important. Taxpayers must analyze very closely exactly what they agree to, otherwise they could face unintended consequences.

New offshore account rules cause some to surrender citizenship

The primary purpose of U.S. and California tax laws is to collect revenue for the government, but legislators are very familiar with the power of tax laws to influence taxpayer behavior. By imposing an additional cost on a transaction, tax laws alter the incentive structure of various decisions. The recent changes in tax reporting requirements for those who hold offshore bank accounts and other foreign assets, however, have provided some expatriate taxpayers with an unusual incentive: to renounce their U.S. citizenship.

Restricted stock units leave some workers with high tax bills

Investors will soon be able to own a portion of California-based Facebook when the company goes public. While the imminent initial public offering is a source of excitement for some, it may be cause for concern among some Facebook employees. Because of an interesting provision in the Tax Code, Facebook estimates that its workers will owe the Internal Revenue Service and the state of California a total of $4 billion in taxes when the company's shares hit the open market.

IRS constrained in tax shelter case by statute of limitations

Tax controversies reach the courts all the time, but last week the nation's highest court decided a high-profile tax case that has significant consequences for the Internal Revenue Service. The case involved the IRS's investigation into the "Son of BOSS" tax shelters, so called because they appeared similar to earlier shelters that simply bore the acronym "BOSS," which stands for "bond and option sales strategy."