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Orange County Tax Law Blog

Your rights as a taxpayer

A number of years ago the Taxpayer Advocate Nina Olson recommended a taxpayer bill of rights. In 2014, the IRS adopted the idea along with ten rights. We’ll summarize them in this post.

We have written about taxpayer rights over the years, however many people still do not realize they have certain rights when dealing with the IRS. One good step forward has been to translate the taxpayer bill of rights into Spanish, Chinese, Korean, Russian and Vietnamese.

Parallels in Bitcoin and Swiss bank investigations

About a decade ago, the IRS launched its investigation into offshore accounts with a John Doe summons of UBS. This year, it used a similar John Doe summons to request more information from Coinbase.

These are certain requirements for these types of summons, which we will address in this blog. But what seems certain is that account holder information is about to start flowing to the IRS. The agency is ordering more training for field Criminal Investigation Agents suggesting the increased focus could lead to criminal tax charges.

How to identify a pernicious W-2 tax scam

‘Tis the season for an annual warning about a scam used by cybercriminals to obtain identity information by requesting W-2 information. As the IRS and state tax agencies crack down on identity theft, more personal identification data is required to file a fraudulent tax refund return.

These spoofing tactics involve sophisticated impersonations of internal executive email. They often target mid-size companies and large corporations where people cannot walk down the hall to verify a request.

Coinbase must turn over information to IRS

Last week, the price of bitcoin crossed the $10,000 threshold after soaring for months. In the same week, Coinbase (a company that facilitates use of the cryptocurrency and others) faced a setback in an IRS investigation and will have to turn over records.

A U.S. Magistrate Judge in San Francisco ruled in favor of the IRS, finding its request for user information was not overly intrusive. After fighting with the agency for about a year, the company claimed a partial victory after narrowing the scope of what it must disclose.

IRS commissioner departs; Agency without permanent leader

Over the years, many of our posts have covered announcements by IRS commissioner John Koskinen. They have covered many subjects from the flavor du jour tax scams to tips for avoiding tax penalties.

This week the commissioner completes his term in office. He will return to retirement at age 78. He told the New York Times, “[s]urvival is its own reward” in a recent interview. We will explain why he feels this way.

Did you get a letter from the IRS? Here is what to do

Each year, the IRS sends out millions of letters. It is the agencies first line of communication. A quick Google search did not turn up the exact number, but the IRS closed 4.7 million Automated Under Reporter (CP 2000) cases in fiscal 2011.

And notices and letters are not only sent when a balance is due. The IRS may send a letter when it has a question about your tax return or needs additional information related to a 1099 form. In some cases, the IRS might even be sending good news that you are due a larger refund.

Differences between an “innocent spouse” and an “injured spouse”

There are obvious tax benefits for a married couple to file taxes jointly instead of individually. There are credits, deductions and exemptions that only spouses qualify for. Generally, joint tax returns save time, money and effort; it’s a “one and done” proposition, and doesn’t require duplicative effort for each partner to submit his or her own individual return.

Joint tax returns result in what is known as “joint and several” liability regarding any tax debt. This means that the IRS can collect any taxes due from both spouses (or either, if one is insolvent or unavailable).

Don’t become a victim: preventing tax return fraud

Our world is, as you know, an increasingly electronic one. Our medical records are digital, as are banking transactions, bill paying, vital statistics information (like birth certificates, addresses, social security numbers), credit history and more.

As more and more institutions convert sensitive documentation to an electronic format, the potential grows for data breaches and unauthorized access. Unfortunately, hackers are getting smarter and more efficient at stealing this information as well.

Make these year-end tax moves to minimize liability in 2018

As this year winds to a close, many of us are focused on such issues as what to make for Thanksgiving, and which presents to buy for Christmas. There are also important financial issues that, while they might not necessarily be first in our minds, need attention as well. Among these are making decisions about medical and life insurance, and health savings accounts for next year. There are also last-minute tax issues to consider that could have a huge impact on 2018’s tax bill.

Maximize 401(k) transfers

How can you reduce or avoid estimated tax penalties?

What is the estimated tax penalty? It applies when you fail to pay enough tax over the year through wage withholdings or estimated payments.

In 2015, more than 10 million people were assessed the penalty (calculated at the IRS interest rate on the unpaid tax). It is a sizable increase from 2010, when the number was 7.2 million. More people working in the sharing economy full-time or as sideline gigs might explain some of the upward trend.