IRS Attacks Business Owners in 419, 412, Section 79 and Captive Insurance Plans Under Section 6707A

By: Lance Wallach

Taxpayers who previously adopted 419, 412i, captive
insurance or Section 79 plans are in big trouble.

In recent years, the IRS has identified many of these arrangements as abusive devices to funnel tax deductible dollars to shareholders and classified these arrangements as listed transactions." These plans were sold by insurance agents, financial planners, accountants and attorneys seeking large life insurance commissions. In general, taxpayers who engage in a "listed transaction" must report such transaction to the IRS on Form 8886 every year that they "participate" in the transaction, and you do not necessarily have to make a contribution or claim a tax deduction to participate. Section 6707A of the Code imposes severe penalties for failure to file Form 8886 with respect to a listed transaction. But you are also in trouble if you file incorrectly. I have received numerous phone calls from business owners who filed and still got fined. Not only do you have to file Form 8886, but it also has to be prepared correctly. I only know of two people in the U.S. who have filed these forms properly for clients. They tell me that was after hundreds of hours of research and over 50 phones calls to various IRS personnel. The filing instructions for Form 8886 presume a timely filling. Most people file late and follow the directions for currently preparing the forms. Then the IRS fines the business owner. The tax court does not have jurisdiction to abate or lower such penalties imposed by the IRS.

"Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years."

Many business owners adopted 412i, 419, captive insurance and Section 79 plans based upon representations provided by insurance professionals that the plans were legitimate plans and were not informed that they were engaging in a listed transaction. Upon audit, these taxpayers were shocked when the IRS asserted penalties under Section 6707A of the Code in the hundreds of thousands of dollars. Numerous complaints from these taxpayers caused Congress to impose a moratorium on assessment of Section 6707A penalties.

The moratorium on IRS fines expired on June 1, 2010. The IRS immediately started sending out notices proposing the imposition of Section 6707A penalties along with requests for lengthy extensions of the Statute of Limitations for the purpose of assessing tax. Many of these taxpayers stopped taking deductions for contributions to these plans years ago, and are confused and upset by the IRS’s inquiry, especially when the taxpayer had previously reached a monetary settlement with the IRS regarding its deductions. Logic and common sense dictate that a penalty should not apply if the taxpayer no longer benefits from the arrangement. Treas. Reg. Sec. 1.6011-4(c)(3)(i) provides that a taxpayer has participated in a listed transaction if the taxpayer’s tax return reflects tax consequences or a tax strategy described in the published guidance identifying the transaction as a listed transaction or a transaction that is the same or substantially similar to a listed transaction.

Clearly, the primary benefit in the participation of these plans is the large tax deduction generated by such participation. Many taxpayers who are no longer taking current tax deductions for these plans continue to enjoy the benefit of previous tax deductions by continuing the deferral of income from contributions and deductions taken in prior years. While the regulations do not expand on what constitutes "reflecting the tax consequences of the strategy," it could be argued that continued benefit from a tax deferral for a previous tax deduction is within the contemplation of a "tax consequence" of the plan strategy. Also, many taxpayers who no longer make contributions or claim tax deductions continue to pay administrative fees. Sometimes, money is taken from the plan to pay premiums to keep life insurance policies in force. In these ways, it could be argued that these taxpayers are still "contributing," and thus still must file Form 8886.

It is clear that the extent to which a taxpayer benefits from the transaction depends on the purpose of a particular transaction as described in the published guidance that caused such transaction to be a listed transaction. Revenue Ruling 2004-20, which classifies 419(e) transactions, appears to be concerned with the employer’s contribution/deduction amount rather than the continued deferral of the income in previous years. Another important issue is that the IRS has called CPAs material advisors if they signed tax returns containing the plan, and got paid a certain amount of money for tax advice on the plan. The fine is $100,000 for the CPA, or $200,000 if the CPA is incorporated. To avoid the fine, the CPA has to properly file Form 8918.

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, Wallach is a frequent speaker on retirement plans, financial and estate planning, and abusive tax shelters. He is also a featured writer and has been interviewed on television and financial talk shows including NBC, National Pubic Radio’s All Things Considered and others. Lance authored Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as AICPA best-selling books including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots.

Contact him at:
516.938.5007,
wallachinc@gmail.com, or
www.taxadvisorexperts.org, or
www.taxlibrary.us.

Lance Wallach, captive insurance and Section 79 plan expert, is the nation's leading authority on resolving IRS tax problems for individuals and businesses. www.taxadvisorexperts.org, or www.taxlibrary.us.

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Tax Accountant San Ramon, CA Becomes One of the Top CPA Firms for Local Business Owners

By: Samantha Perry

Tax Accountant San Ramon CA has become one of the top local CPA firms which provides local businesses, corporations and individuals with tax preparation, accounting and planning services.

With California's declining revenues, the Franchise Tax board will be paying much closer attention to businesses' tax returns in 2011. Accountants predict an increase in audits as corporate tax returns will be highly scrutinized during the next tax season. The results of an incorrectly filed tax return may lead to an extensive audit of company's financial statements and records, as well as a possibility of incurring numerous fees and penalties.

"I always consult my tax accountant for my business' record keeping, and hire a professional CPA firm to prepare my corporate tax returns," says a resident of San Ramon, CA, who owns a small local business. "It is better to pay a professional who knows what they are doing than deal with IRS and FTB over a mistake on a tax return!"

Clients who are looking for a new CPA can safely rely on Tax Accountant San Ramon CA to professionally handle all of their tax and accounting transactions. This includes expert advice on long-term investment strategies, counseling during real estate purchasing, and a number of other financial services, which range from individual income tax preparation, to businesses, non-profit organizations and corporate accounting and record-keeping.

Tax Accountant San Ramon CA is a local firm with years of experience in the tax accounting field. It provides its clients with tax preparation services, business accounting, and expertise and sound advice on the best ways to keep good financial records. This ensures accuracy during tax preparation and safeguards business owners and individuals in an event of a tax audit.

Well-established accounting firms are experienced in working with FTB as well as IRS, and can often provide clients with invaluable assistance relating to their individual and business tax concerns. They typically also have connections to other experts in the industry, which enables them to provide a full range of financial, accounting and tax services for their clients. This is why San Ramon, CA small businesses, larger corporations, individuals, fiduciaries, and tax exempt organizations choose Tax Accountant San Ramon, CA as their preferred accounting firm. Call today for more information: (925) 361-2382.

Tax Accountant San Ramon CA http://www.taxaccountantsanramonca.com/ (925) 361-2382

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Social Security… Can You Still Bank on It? Thoughts from leading investment expert, Saen Higgins

By: Saen Higgins

There is a legitimate cause for concern among baby boomers as they begin reaching retirement age. Saen Higgins Founder and President of Wealth Without Risk, points out that the health of America’s Social Security system is certainly alarming. "While there isn’t what I would call an immediate crisis, there is most certainly a long-term problem." Stated Higgins in a recent interview. "It looks like the trust fund for Social Security will make up the difference between income and expenses for the next 25 years, but most experts believe that if nothing is done, the Social Security trust fund will run dry by about 2037." Higgins continued. "It’s not the end of the free world, but it does set off some alarms."

Higgins warns us, pointing out that this advice is particularly important to Generation X’ers, to be proactive in our approach to planning for retirement. We have all heard from our various advisors the importance of diversifying our portfolio. But what does that really mean? "It means you need a mix of high risk/high yield investments and low risk/possibly lower yield investments." Advises Higgins.

What Saen Higgins and his business partner Tony Martinez teach their Wealth Without Risk clients is to add to that a low risk, HIGH yield investment by investing in tax lien certificates and tax lien deeds. Higgins believes, that individuals investing in tax lien certificates are creating a steady flow of income for themselves and are better prepared for a future without Social Security.

"I simply don’t know of a safer place to put your money, now or any time in the future." Higgins further stressed that "Investing in tax lien certificates is the only 100% guaranteed investment out there. At Wealth Without Risk, we have created a proven method for investing in tax lien certificates that insures you receive a 16-22% return on your investment each and every time. When you invest in property tax liens you don’t need to stress out about what Washington decides to do with Social Security, or even what is happening in the stock market. Tax lien certificates and tax lien deeds pay out no matter what the DOW is doing. Period."

To learn more about protecting and securing your financial future through investing in property tax liens, please visit www.higginsnow.com or call 1-800-882-0467. Wealth Without Risk has study material available, and a schedule of workshops to help you learn more.

Saen Higgins has more than 30 years of experience in the financial industry, which includes working with investments, insurance, mortgages, taxes and financial planning. He has twenty years of experience investing in tax lien certificates and has written many educational articles for various financial websites as well as comprehensive training material for tax lien investing. If you’d like to learn more about Saen Higgins and/or investing in tax lien certificates or tax lien deeds, please visit http://www.higginsnow.com

Saen Higgins is the worlds leading authority on investing in tax lien certificates. He is the only expert speaking and training on tax liens today that actually continues to invest in tax lien certificates himself. A self-made multi-millionaire, Saen has inspired audiences around the globe with his wealth building strategies. www.higginsnow.com

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Tax Court Denies Challenge to the Alternative Minimum Tax, Revealing Costly AMT Taxpayer Errors

By: George Bauernfeind

On occasion a frustrated taxpayer will go to Tax Court in an attempt to convince a judge that the Alternative Minimum Tax was never intended to apply to them. As in the case of Fritz v. Commissioner, however, no sympathy is ever found there - if the calculations are done correctly the Court simply confirms that the tax is owed. The facts in these cases present interesting lessons, however, because they reveal both the terrible feeling of frustration when getting blindsided by the AMT as well as the simple, yet missed, planning opportunities that could have allowed many of these folks to avoid paying the AMT.

Facts of the case
Mr. and Mrs. Fritz filed their tax return without attaching Form 6251, "Alternative Minimum Tax – Individuals." They promptly received a notice from the IRS informing them that they owed exactly $7,007 more in AMT. The Fritz’s tax return was relatively simple - $329,000 of total income, the majority of which - $283,000 – was long-term capital gain and qualifying dividends. The Fritzes took the standard deduction, apparently because this was greater than their itemized deductions, as well as the deduction for their personal exemptions.

Alternative Minimum Tax problem

Two AMT issues caused the Fritz’s Alternative Minimum Tax problem.

Loss of the standard deduction and the deduction for personal exemptions

As has been discussed in many previous articles, under the AMT the standard deduction is disallowed in total, as are the deductions for personal exemptions. Because of this, Alternative Minimum Taxable Income (AMTI) is always higher than Regular Tax taxable income by these amounts. For 2011, the standard deduction for a married couple filing jointly is $11,600, and each personal exemption is $3,700. In a case like the Fritzes, their AMTI for the current year would be $19,000 higher.

Loss of the AMT Exemption due to the large capital gain

When a married couple’s AMTI exceeds $150,000 the AMT exemption begins to be phased out. The exemption amount for 2011 is $74,450, but this is phased out at the rate of $1 of exemption for every $4 of AMTI in excess of $150,000. In the Fritz’ situation, they would lose $44,672 allowing them an AMT exemption amount of only $29,778.

The Fritz’ argument

The argument made to the Tax Court by the Fritzes was that capital gains and qualifying dividends should be taxed at the 15 percent tax rate, as specified in the tax law for both the AMT as well as for the Regular Tax. By operation of the AMT calculations, they alleged, their effective tax rate on this income actually was higher than this.

The Tax Court’s answer

The Tax Court judge was direct in his response: "Petitioner’s position in this case misses the point. In reality, the tax on the capital gains was limited to 15 percent and the ‘additional tax’ was attributable to the elimination of preferences." Judgment in favor of the IRS.

Planning opportunities the Fritzes missed

There are several things the Fritzes could have done to reduce, and likely eliminate, their Alternative Minimum Tax.

Itemizing deductions instead of taking the standard deduction - If the Fritzes had home mortgage interest, or if they had made any charitable contributions, they could have reduced their AMT by itemizing deductions instead of taking the standard deduction. This, unfortunately, is a common error for AMT payers. If they had had, for example, just $1,000 in interest or contributions, they would have directly reduced their Alternative Minimum Tax by $280. They weren’t required to take the standard deduction; they did it because it was larger than their itemized deductions, and they just didn’t think about the AMT.

Spread the capital gain over two or more years – The timing of when to sell securities and realize capital gains is entirely within the control of a taxpayer. Not spreading their very large gain of $246,000 over just two years was a costly mistake on the part of the Fritzes. If they had instead recognized half of their capital gain in the current year and pushed the other half to the following year, they would have lost over $30,000 less of their AMT exemption, most likely removing them entirely from the AMT!

Conclusion

As the Fritzes learned the hard way, paying the Alternative Minimum Tax is a penalty that often can be avoided with just a little awareness of the AMT. Had Mr. & Mrs. Fritz done this, they would have $7,000 more in their bank account today instead of having to put this amount in the mail to the US Treasury. Lesson learned the hard way!

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator/planner to help you reduce your Alternative Minimum Tax. Visit http://amtindividual.com or http://amtblog.com for access to this tax software and to read more tax planning articles on the Alternative Minimum Tax.

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Capital Gains Tax on Shares

By: John Ooosthuisen

For those wanting to learn more about Capital Gains Tax (CGT) on shares, the professional accountants at PATC offer a range of services to help determine your liability for this type of tax. The purpose that your shares serve will determine whether your shares will be charged for Income Tax or Capital Gains Tax, and your professional account is the best person to advice on whether you are liable for CGT on your shares.
If your shares are intended as trading stock used to resell, any gain or loss on disposal will be of a revenue nature. Revenue gains are subject to income tax at your marginal tax rate, which may vary between 18% and 40% depending on your income tax level. If your shares act as a capital asset (ie. A long-term investment) any gain or loss will be of a capital nature.
Information pertaining to CGT on shares includes the following:
• Capital gains are subject to tax at a lower rate than ordinary income. For individuals, the first R15 000 of net capital gains or losses in a tax year is exempt for CGT – this is known as the annual exclusion.
• Of this balance, 25% is included in your taxable income and taxed at your marginal tax rate; much like your salary or pension is taxed.
• The Capital Gains Tax rate on an individual’s net capital gains in a tax year can therefore vary between 0% and 10%, depending on whether your shares exceed the annual exclusion or not.
• Companies and trusts are liable for a higher CGT rate, and are not qualified for exclusion.
• Companies and trusts must include 50% of their net capital gains in their taxable income, and also pay secondary tax (STC) on the profits they distribute.
• The effective tax rate on net capital gains for a company is 29% x 50% = 14,5%. If the capital profit is distributed as a dividend, the effective company tax rate is increased to 22,27% (14,5% normal tax + 7,77% STC).

Contact PATC today to learn more about the Capital Gains Tax services and other accountant South Africa services on offer.

Gavin Bacon is currently completing his Master’s Degree on "how CGT affects investment decisions" and as such is an expert in the field of CGT. So, feel confident that when you contact PATC, you will be assured of the best advice possible.

Pinetown Accountants provide personal and professional services in Durban South Africa. Our services are tax consulting, professional accountant and financial accountants.

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Tax Accountant Livermore CA is One of Tri-Valley's Top CPA Firms During This Tax Season

By: Samantha Perry

With constantly changing tax laws, the demand for professional CPA and accounting firms has dramatically increased in the Tri-Valley. Tax Accountant Livermore CA has become one of the best local firms, which specializes in individual and business accounting and tax preparation.

Last year brought about more regulatory changes in mortgage lending, continued volatility in the stock market, surging prices of commodities, unemployment, and a myriad of other economic shake-ups. But, as another tax season is upon the American public, many are scratching their heads in trying to figure out how to accurately file their personal and business income taxes.

A recent article in The Wall Street Journal talks about an overwhelming number of advantages in choosing a professional accountant to prepare a tax return. There are new write-offs for businesses and individuals that most people simply are not aware of. Each of these needs to be separately classified, and if there are any mistakes – the IRS and the Franchise Tax Board levy high-dollar penalties to correct them.

Tax Accountant Livermore CA has become one of the top local Certified Public Accountant companies because they continually stay abreast of important financial issues and tax law changes, therefore providing individuals and business owners with the best and most up-to-date accounting advice. They care about the financial success of their clients, and offer expert advice in many areas - ranging from individual investment services, income tax preparation, cash flow analysis, and long term planning, to business tax filings, financial statement reviews, bookkeeping, bank and general ledger reconciliations, and other accounting services.

A good accounting firm will be able to help their clients by figuring out all the applicable tax credits and write-offs, and advising them on long-term wealth building strategies and investment options. But beyond this, having a professional CPA firm prepare an individual, corporate, or organization's tax return will minimize the risk of mistakes, which can potentially save a lot time, money and headaches down the road. Tax Accountant Livermore CA is trusted by many clients with their incomes tax return preparation and filing, as well as a plethora of other accounting needs. Set up a consultation today by calling (925) 361-2382.

Tax Accountant Livermore CA http://www.taxaccountantlivermoreca.com/ (925) 361-2382

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Truax.net: Short Sales, Foreclosures, Abandonments & Income Taxes - There May Be A Solution

By: William D. Truax

It’s bad enough to lose a house, to walk away, or to have to short sell it. What’s even worse is finding out that you might be responsible for income tax on the forgiven debt. However, in many cases, an income tax disaster doesn’t have to follow the loss of a property.

The whole reason many people short sell their properties or allow them to go into foreclosure or abandon them is that there’s too much debt associated with that property, causing payments which can’t be kept up, or causing the owner to be making payments on a property which is substantially "under water". The act of a short sale or abandonment or foreclosure allows the property owner to get out from underneath the excessive debt associated with the property. In effect some portion, sometimes a large portion, of the debt associated with the property gets canceled or forgiven. However, income tax law presumes that canceled or forgiven debt represents income, and that income is taxable.

As an example, let’s say you own a house worth about $350,000 in today’s market, but you have $500,000 in debt outstanding against that property. You work out a deal with the lender to sell the property for $350,000, which the lender will take in full settlement of all of your debts. In effect, the agreement is that $150,000 of debt goes away. That $150,000 is considered canceled or forgiven debt, and the lender should send you a 1099 reporting that income both to you and the IRS. So, after losing your house you now have to pay income tax on the $150,000 of canceled debt, too? Not so fast.

There are several exceptions to the general rule that the income from the canceled debt is taxable. One is bankruptcy. If the debt was canceled as a result or part of a bankruptcy proceeding, it’s not taxable.

Another exception is insolvency. If the debtor was insolvent (defined as having more liabilities than one’s assets are worth) on the day the debt was canceled, then the canceled debt is non-taxable to the degree the taxpayer was insolvent that day. Using the example above, if the taxpayer’s assets were worth $650,000 on the day of debt cancellation and that taxpayer’s liabilities totaled $750,000, the taxpayer was insolvent by $100,000. In that case, the first $100,000 of debt cancellation income would not be taxable, but the final $50,000 would be subject to tax. However, if that same taxpayer had been insolvent by $200,000 that day (assets of $650,000 and liabilities of $850,000), then none of the debt cancellation income would be taxable.

These first two exceptions to the general rule about the taxability of cancellation of debt income have been around for years. In response to recent events in the worlds of lending and real estate, Congress has also created two more exceptions: the exclusion for debt cancelled on a principal residence, and the exception for canceled debt regarding real estate used in business. These last two are not a straightforward as they might seem (or should be), so some explanation will be required.

The first thing you need to know is the difference between recourse and non-recourse debt. Generally, a debt is a recourse debt if the lender can legally hold you personally responsible for any unpaid amounts. Believe it or not, most mortgages are recourse debts. However, in the majority of cases, lenders are choosing not to go after debtors who had to short-sell or lost their properties, figuring that the debtor is probably already broke and that they’re not going to have much luck trying to squeeze blood out of a turnip.

There are also non-recourse debts. In California where we practice, purchase money debts used to acquire a principal residence are non-recourse by action of law. In other words, California state law effectively prevents a lender from going after a debtor who defaults on a loan which was used to acquire his/her home. This only applies to the original loan, and does not apply if the loan has been refinanced. Many other states have similar rules, but not necessarily all. Generally, when you get the 1099 showing the cancellation of debt income, a box on the form will be checked by your lender showing if they think you could be held personally responsible for repayment of the debt.

It’s important to know the difference between recourse and non-recourse debts, because they’re handled very differently for tax purposes. A default on a non-recourse debt generally does not result in any cancellation of debt income; we simply figure that the property was "sold" for whatever debt remained at the time of default and treat the whole deal as a sales transaction. A default on a recourse debt usually results in the property being treated as being sold for whatever it was actually worth that day, and any forgiven debt above the actual value of the property treated as cancellation of debt income.

The next important thing to know is the concept of "acquisition debt". Acquisition debt is defined for tax purposes as that debt which was used to acquire or improve the property in question, up to certain limits. So if you borrowed $300,000 to buy your home and later refinanced it to take out another $100,000 which was spent on living expenses, only $300,000 of your $400,000 total debt is considered acquisition debt. On the other hand, if you had spent $50,000 of the re-fi proceeds on adding a room to your home, your acquisition debt would be $350,000 ($300,000 purchase money plus $50,000 improvements).

So, what are these new exceptions to the general rule regarding the taxability of cancellation of debt income? The first exception applies to cancelled debt on one’s personal residence. This exception is in effect through the end of 2012. It relates to a short sale, foreclosure or abandonment of your principal residence (where you actually lived), and applies only to acquisition debt related to that residence, and only up to $2 million of acquisition debt. Unfortunately, California law has lower limits for this exception, which can result in taxable income for California in a situation where Federal law allows for complete exclusion of income.

The second exception applies to real property used in business. Without going into a long explanation of tax law, suffice it to say that any rental property or real property used in a business will, in most circumstances, qualify for this exclusion. This exclusion also applies only to acquisition debt, and has a couple of other hard-to-explain limitations. In any case, even with limitations and qualifications, it’s good to have another exception to the general rule about the taxability of canceled debt income which goes beyond the mortgage on one’s residence.

A note of caution: if you do use one of these exceptions, you may be required to reduce any pending tax benefits to which you might be entitled. You might have to reduce passive loss or net operating loss carryovers; you might have to reduce your basis (cost for tax purposes) in some other property; or you might have to reduce some tax credits to which you’re entitled, such as the foreign tax credit, minimum tax credit or general business tax credit.

Another note of caution: lenders seem to have a hard time getting their 1099s right as regards cancellation of debt income. They might fail to issue a 1099, or might issue it late, or might issue it with incorrect data (we’ve seen all of these). Even if no 1099 is issued, it’s your obligation to report the cancellation of debt income, and it’s your problem if the IRS finds out about it later. It’s risky to assume that no 1099 will ever be issued, since some lenders are just backlogged on their paperwork. On the other hand, if the lender provides a 1099 with incorrect data, you have the right to correct it on your tax return.

One of the saving graces about all these exceptions and their attendant limitations, and a great benefit to taxpayers, is that they can be "stacked". In other words, you might have cancellation of debt income which exceeds the limitations of one of these exceptions, but in many cases, another exception can be used to cover much (if not all) of the remaining income. It might be more work and more figuring, but it beats having to write a huge check.

Having given you all this data, it would be irresponsible of us to allow you to assume that’s all there is to know about this subject. As with any tax law, there’s lots of exceptions, qualifications and "gotchas" which can change everything. Also, much depends on the facts of a particular situation, and your facts may lead to a very different outcome from another taxpayer whose facts seemed similar at first glance.

In any case, the moral of the story is that, while losing a home or property can be a difficult experience, in many cases having to pay income tax on the forgiven debt is not a forgone conclusion and can be avoided if you know what you’re doing.

William Truax, a tax practitioner & financial consultant in private practice over thirty years, is founder of William D. Truax, E.A. Tax Advisors (http://www.truax.net), in Glendale, CA--experts at tax prep, planning & representation. His full bio & services offered is at http://www.truax.net.

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It's Truly Not Difficult To Have An Eco Tax Deduction

By: Diedre Johnson

Filing tax returns gets a negative rap. Comprehending tax codes can be very tough, and even if you have been aware of tax incentives or reimbursement credits, using them could be an entirely different challenge than you realize. Most people who have any complications in their tax processing go to expert tax accounting firms to sort things out. If you develop a relationship with a tax firm, they can assist you each tax season. People with higher incomes usually look to their tax tax accounting firm to "solve their particular tax challenges" simply by recommending they invest in a costly automobile as a business cost, buy a house, or donate to a non-profit business.

Individuals as well as small business owners may not have such problems of lavishness, but finding out how to take advantage of the most tax incentives available can nonetheless be time intensive and stressful. What people may not recognize is that tax math is pretty simple when you think about it. Yes, you have to evaluate what to put into the equation, and there may be numerous options for every single variable, but the effort is often worth the time spent on getting the taxes done properly.

What most people are asking their particular tax accountants nowadays is how they can make the most of environmental tax credits. You will find there's a strong public initiative towards being far more environmentally friendly generally speaking. The public understanding of environmentally friendly attitudes has been positive for a long period of time. However, most of the people lack the determination to make big up front financial investments with no guarantee of a return, or if there's a return, it will not be obtained for a number of years.

Tax rewards are meant to have an impact on the public to be environmentally friendly. The benefits to modern society and the surroundings are already well known. The good effect on public health and the involved fees are not fully understood, but are slowly becoming acknowledged. It's just that ultimate step involving going out and purchasing a photovoltaic solar system for a residence, organization, or government structure, that most customers have not been ready to take.

The particular environmental tax credits are rather straight forward, but require a little bit of reading. Solar systems aren't the sole way to go. Weatherizing a house can also bring a tax benefit. Acquiring windows that are approved and guaranteed to keep occupants more comfortable in winter and cooler in the summer, reducing energy use for heat and cooling, is already a typical investment folks are making. In case new windows are required anyway, the purchase of good quality windows having a tax benefit is an easy choice to make.

Private photovoltaic solar systems have grown to be more common, and combination units that also incorporate wind electrical power are beginning to appear in the client market. Small businesses are swift to see the advantage of a photovoltaic system, or even a combination technique, because of the higher power usage of most smaller businesses. And now with tax rewards, these systems become affordable. Learn about tax credits that may benefit you, and your business.

BorregoSolar Photovoltaic Systems offers firms and gov agencies in the United States with solar photovoltaic energy financing and custom design services.

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Tax Settlement - Methods to Resolve an IRS Back Tax or State Back Tax Problem

By: Prince Ahmed

There are many methods to settling back taxes with your State and the IRS. Both have created tax settlement possibilities for every type of financial situation. There are thousands of people that cannot pay taxes their taxes in full, by simply writing the IRS or state a check. The worst thing you can possibly do is ignore the problem. If no agreement is made with the IRS or your state, penalties and interest grow very quickly. Below are the tax settlement methods available under the IRS. The specialists at Community Tax Helpers are experts in settling tax issues with both the IRS and all the individual state governments in America.

When you owe back taxes, it is always best to use a tax professional. A tax relief professional's job is to analyze your unique financial situation and help you make the right choices regarding for specific tax problem. Invariably, a tax professional saves individuals time and money by using their services over handling the situation on their own. The professionals at Community Tax Helpers have extensive experience with the solutions mentioned below.

Paying Tax Bill in Full: This is the most obvious settlement of tax problems and the most desired by the government. If taxes are paid in full all IRS actions will stop. Sometimes in order to come up with the money it may take a little thinking outside the box. One common method for getting the money to pay taxes back is to borrow money from your home through a home equity loan, which will settle your back taxes and allow you a low monthly payment at the rate of your mortgage to pay off the taxes. Some also consider borrowing from family and friends or selling some assets. It is advisable to consult a tax professional before settling a tax debt in full.

Offer in Compromise: An offer in compromise is a method used for tax settlement where the amount paid for debts owed is less than the original amount owed. This program is a hardship program, and few people who apply will qualify. This program is for those who can't pay back taxes in full and owe back taxes. Consult a tax professional for the standards used in assessing eligibility for the program.

Installment Agreement: An installment agreement is the most common form of tax settlement. Once an installment agreement is accepted, the IRS will consider the client to be in good standing as long as you make your minimum payments on time each month. If you owe back taxes an installment agreement can be the answer to containing a tax problem, and ultimately putting an end to it.

Partial Payment Installment Agreement: This method is available for people that are unable make the payments required with an installment agreement. The partial payment option allows for smaller monthly payments that may add up to less than the total amount of tax owed. The situation may be reviewed to see if the IRS can increase payments or terminate the agreement. This is also a hardship program, and if you can't pay back taxes in full you may qualify.

Declared Uncollectible: The IRS can determine that you are currently uncollectible, and once this happens they will halt all collection actions against you and will review your financial situation after a given period of time. People may end up paying no taxes at all if the situation doesn’t change.

Statute of Limitations Expires: The IRS typically has 10 years to collect taxes owed from the date of the original assessment. If 10 years passes and the IRS has not collected, they can no longer collect these tax amounts. This 10 year "clock" can be reset under certain circumstances such as an audit of a tax return, or in the case of a late filed tax return.

IRS Penalty Abatement: If you owe back taxes there are usually large amount of IRS penalties and interest on top of the tax amount owed. These penalties may grow quickly and can make up for the majority of the tax amount owed. The IRS allows individuals to abate part of or all of their penalties accrued on their tax debt if they can show a legitimate reason for not being able to pay they are assessed too much tax.

Financial Hardship: Taxpayers may not be able to pay their taxes because they have no cash, assets, or any ability to pay. They may be constantly harassed by the IRS regardless of their ability to pay. Individuals do not have to keep taking this constant harassment from the IRS. The tax professionals at Community tax helpers will use the method appropriate to your case to end your tax problems.

Prince Ahmed writes for Community Tax Helpers which offers IRS or State Tax problems with a wide range of services e.g. Stop IRS Wage Garnishment and Back Taxes Help

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Should You Accelerate or Defer Income to Minimize Your Alternative Minimum Tax?

By: George Bauernfeind

In connection with year-end tax planning, much has been written about accelerating or deferring deductions. The sometimes-overlooked question of accelerating or deferring income deserves just as much attention, especially for those in the Alternative Minimum Tax. This article will look at what needs to be considered in planning around income recognition, including a summary of the different types of income to which this planning can apply.

What happens with the AMT calculation when one’s income level changes?

Tax brackets for the Alternative Minimum Tax are progressive, as are those of the Regular Tax. What this means in simple terms is that additional amounts of income are taxed at a higher rate than the tax rates that apply to the lower levels of income. The Regular Tax has six brackets, ranging from 10% to 35%, while the AMT has just two - 26% and 28%. As will be explained below, however, there are other adjustments in computing taxable income that actually can make these stated tax brackets significantly higher.

What are the real AMT brackets?

In calculating the Alternative Minimum Tax, an individual is allowed to subtract an exemption amount from what otherwise would be taxable income. This exemption amount is $74,450 for a married couple in 2011. As has been discussed in previous articles, however, the exemption is phased out as a taxpayer’s income increases. This phaseout has the direct effect, therefore, of increasing the effective AMT tax rates for individuals who find themselves in this phaseout range.

For 2011, for the married couple, the phaseout begins at $150,000 and doesn’t stop until their income exceeds $440,000. Within this range, each incremental $100 of income will result in a loss of $25 of the AMT exemption. The result is that a 28% Alternative Minimum Tax bracket is increased by a factor of 25%, resulting in an effective AMT tax bracket of 35%!

What does all this mean for planning?

Knowing one’s effective tax bracket is the only way to do proper AMT planning. It can be a costly mistake to deliberately accelerating income, thinking one is in an Alternative Minimum Tax bracket lower than the Regular Tax bracket, only to find out this actually is not the case. Many year-end tax planning articles routinely suggest that people in the AMT do exactly this, but without knowing what your effective AMT tax rate is it could instead turn out to be a costly mistake.

What types of income can be accelerated or deferred?

The answer to this question will depend on each individual’s situation- i.e., whether the person is employed or self-employed, what kind of investments the person has, etc. Discussed below is a brief overview of some of the types of income that an individual may be able to accelerate or defer at year-end.

- Employee compensation such as bonuses and stock options

Some employers allow employees the choice of taking their bonuses currently or deferring them to a future year. In addition, employees may be granted stock options, and the timing of when these options are exercised is entirely up to the employee – they can be exercised just as easily in December as they can in January. If the employee has what are known as nonqualified stock options, taxable income will be recognized immediately on the date of exercise – both for the AMT as well as Regular Tax purposes. If the options are qualified options (these are more commonly known as incentive stock options, or ISOs), there is no taxable income on the date of exercise for Regular Tax purposes, but there is for the Alternative Minimum Tax.

- Business income from self-employment, LLCs or partnerships

A business usually has some degree of control at year-end over its net income for that last month of the tax year. For example, a cash-method business could pay outstanding bills in December to reduce income, or wait to pay them in January, which would directly affect the amount of income reported on the business owner’s tax return. The business also could hold off from sending out certain bills out towards the end of the year, thus postponing income into the following year.

- Investment income

Here are some acceleration or deferral thoughts on a few types of investments:

Capital gains – an individual has complete control over the timing of any sales of investments, so capital gains easily could be recognized this year or next.

Rental income – a landlord might ask for the rent check that is due on January 1st to be paid a few days early.

Interest and dividends – as a longer-term strategy, an individual could shift in or out of bonds and/or dividend-paying stocks to affect the amount of interest and dividend income received on a current basis.

Conclusion

Knowing what tax bracket the taxpayer is in is critical to any tax planning, but especially so for individuals in the Alternative Minimum Tax. The only way to minimize the AMT is to take a little time as we approach year-end to look at the options available in terms of what income might be moved between 2011 and 2012, and then to figure out which of these choices will result in the lowest tax burden. With the holiday season keeping everybody pretty busy, it’s never too soon to start doing at this!

George Bauernfeind is with AMTIndividual, providing analysis, customized strategies, and an online dual tax calculator / planner to help you reduce your Alternative Minimum Tax. Visit www.amtindividual.com or www.amtblog.com to read more tax planning articles or to access this tax software on the Alternative Minimum Tax.

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People are Always Happy to Get Tax Back

By: Phoenix Delray

People are always happy when they get overpayments on tax back. There are many reasons why people can end up overpaying taxes but not realize it. Most people who do over pay do not know that they can get a refund even if the filing goes back up to six years.

Sometimes the error made when filing a tax return is something that the person did wrong when they filed. If they used a wrong tax code number, it can result in the wrong amount of money being paid. Sometimes new workers are given an emergency tax code number to use when they first begin their jobs. This number can turn out to be wrong later on.

Other times, the error is a result of the type of industry someone works in. Those who work in the construction field are more likely to have this happen than many others. Students who work occasionally may not have filled out the correct paperwork that can result in errors. People who work more than one job sometimes have overpaid.

People who come from overseas to work in the UK sometimes overpay. They may only work part of a year and then return to their home country. When this happens, they may not be aware that they may be eligible to get some money back.

If the circumstances surrounding income change, it is possible that the tax rate has changed. Sometimes people go from working full time to only working part time. Sometimes, the amount of income from investments and other sources decreases. These situations can make a difference in whether or not a refund is possible.

Considering that it is possible to get overpaid tax refunded for a period of up to six years, it is possible to obtain money from multiple years. Sometimes this can amount to a sizeable amount of money.

Her Majesty s Revenue and Customs, or HMRC, has a website that people can use to find out more information about how to handle tax payments. The site also has information about how to claim money that was overpaid from previous years. Alternatively, there are companies that can do this for businesses and individuals if people do not want to handle it on their own. They make the process easy by having the user fill out some information and they take it from there. For many people, this works very well particularly if they are the type of person who finds things like this confusing. People who think they are entitled to tax back may want to look into it.

For more information on tax back, please visit our website.

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Truax.net: Life Support for the Goose

By: William D. Truax

"The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing." — Jean Baptiste Colbert

You've heard about the goose that lays the golden eggs? You know, the eggs we've been spending faster than they've been appearing for the past forty years.

Birds and eggs aside, real wealth rises from our ability and willingness as a country and a people to create genuinely useful products, adding to the general prosperity. Wealth creation has been having a bad day for the last forty years, and we've finally gotten to the point where it's on the endangered species list. Insufficient wealth creation means a dim future for us all.

America was built on some basic ideas, a number of which were intended to facilitate wealth creation, and thus a prosperous society. For example, the idea that you should be able to own or have things without them being taken away arbitrarily. The idea that you should be able to have and enjoy the results of your hard work. The idea that people could be free and could govern themselves. The idea that the role of government should be limited, and mostly oriented toward supporting those things which facilitate a free and prosperous society. These are all part of the American tradition which allowed those geese to lay all those wonderful golden eggs, the same geese now on life support.

Certainly you've noticed oddities in the financial world recently, such as unfathomable sums of "new money" created out of thin air and added to the national debt in what was promoted as an attempt to hold off a collapse of the banking system. There's also the utter bankruptcy of many state and local governments, California being a prime example. I've mentioned and commented about these things before. Here's a new one; a recent report from the trustees of the Social Security system reveals that total federal income and payroll taxes will need to almost double, and do it now, in order to pay for all the promises we've made with the Social Security system. Doubling all income and payroll taxes — now.

It's painfully obvious that tax revenues are going to have to increase mightily to even begin to come close to covering the debt we've created. Well, that introduces a couple of problems. For one, income taxation, especially heavy income taxation, tends to drive profitable productive activities out of business. Anyone doubtful can look at what happened to the industrial base of this country, most recently exemplified by GM and Chrysler. They couldn't afford to run their plants, pay their staff, provide a decent return to their shareholders, pay their corporate income taxes and invest heavily in new facilities, new technologies, and such. The money which a successful business would have used to replace old facilities or invest in new facilities or technologies went to tax. Thus, we got stuck with old plants and old technologies which could not compete on the world stage, and which have now been, or are being, abandoned. We have a whole wide area of America that used to be alive and vital but is gradually turning into an economic desert where the only remaining jobs are low paid, or in the "health care" (actually sick care) business. Look at Detroit, or any of the other manufacturing centers of the Northeast or Midwest; we're changing from a nation that was the engine of the world to a nation of enfeebled, drug-using hypochondriacs who depend on the reserves of foreigners to sustain our lifestyles.

Another unhappy fact is that most folks really don't want their taxes to double, and might even revolt if this were done. So your representatives are working hard to find a way to get more juicy revenue without having to raise your taxes too much, or too obviously. How to do this? Well, they're starting to implement something similar to "sin taxes," except that we'll all be sinners now. The general idea is to impose a heavy, complex, and convoluted tax structure, then penalize anyone who fails to comply with some dark corner of this sticky mess. The PR idea is that you can assess these heavy penalties because, after all, that person failed to comply with the law. That's the sin; failing to comply. Of course, the fact that it's incredibly difficult to comply with every single rule out there is overlooked. So, the government gets to raise lots of new revenue in the form of penalties and interest on the penalties (and penalties on the penalties, and interest on the penalties on the penalties, ad nauseam). Even better, if anyone protests, they can trot out their spokesmen to talk about stamping out the "underground economy," making sure that everyone pays their fair share, and so forth. After all, they say, you were wrong; you failed to comply; you deserved to be penalized.
Unfortunately, if you penalize the goose too heavily, take away too much of its feed, pluck too many of those feathers, the goose may just roll over and give up. Without some help, the future looks dim.

We handle a lot of tax audits, and that's how we observe things going. Would you be willing to state that you understand all the laws, regulations, rulings, procedures, and doctrines of tax law as it has to do with you and have applied them in full? Anyone? Well then, I guess you deserve to be penalized. Once the IRS contacts you, you may find yourself answering questions like, "How does total penalties equal to 50% of your total tax burden sound? If you don't like that, maybe 75% would be more like it...." Believe it or not, your government, in its haste to raise revenue, is taking on the color of an enemy.

How You Can Protect Yourself

The news is not all bad. Fortunately, this tax system is built on a foundation laid many years ago, back when ideas like fairness, due process under law, and protecting the rights of each citizen were given more than just lip service. As such, there are protections imbedded in the system that you can use if you know about them and know how to use them.

While there's way too much tax law (and regulation, and case law, and doctrine, and procedures) to expect any one citizen/goose to actually know, there are some basic principles which you should always follow, because if you do, it puts you in a position where you can take advantage of those protections. To the degree you don't do these things, you open yourself up to trouble as regards taxes, interest, penalties, interest on penalties, penalties on interest....oops, sorry. You open yourself up to getting a really huge bill from IRS.

Here's what you must do.

File your tax returns on time. "On time" is considered to include valid extensions. But don't forget to file or extend, because the penalty for late filing gets really big, really fast. And don't blow off filing just because you don't have the money to pay. The penalty for late filing is ten times as high as the penalty for late payment. We can almost always work out some sort of payment arrangement, but a late return is usually not fixable.

Always report any and all your income, whether reported to you or not. Even if the report is incorrect, it can be corrected on the tax return. The IRS computer system is set up to crosscheck all income reported to your social security number from all sources against your tax return. Any errors or omissions on the return start a ball rolling which will probably end up costing you money to handle or pay or both. Also, if you omit substantial amounts of income, or even worse, omit income with bad intent, you lose much of the protection offered by the statute of limitations.

Be able to document it all. Keep your records. Keep those bank statements, copies of canceled checks, credit card bills, and so forth. Make sure your records can be clearly understood by someone other than yourself. One of the interesting characteristics of this tax system is that the IRS is presumed correct in its determinations unless you can prove them wrong. Get that? Whatever they say, no matter how outrageous, is right unless you can prove it wrong. And the word "prove" in that use means just exactly that. It doesn't mean "say" or even "say really sincerely" or even "show." It means prove with clear and convincing evidence. Oh, and your word isn't worth much as evidence because citizens, well, have been known to lie when it comes to taxes. Only documents really count, and they have to show pretty clearly what happened.

Not all expenses were created equal. Some expenses, the sort that people actually like to spend money on, require more documentation than usual. The most notable examples are use of a vehicle for business, travel expenses, meal or entertainment expenses, and charitable donations. For vehicle use, you have to be able to show the total number of miles driven in a year, and of these, how many were related to business. That's all. A day book or computer calendar program showing the number of business miles driven daily is adequate to prove business mileage. For business travel, be able to show that the primary purpose of the trip was for business. If you travel in the U.S. that, and the proof of the expense itself, is all you need to show to make the travel expenses deductible. With meals and entertainment expenses, you have to be able to show not only proof of the expense, but also who you saw and what business was discussed. For charitable donations, you need an annual acknowledgment letter or statement or receipt from the recipient organization. A canceled check or credit card bill alone is not enough for donations. Donations for which some return benefit was received (like a service, or participation in a golf tournament, or a fundraising dinner) require a special kind of letter. Without all this extra data, these kind of expenses can be disallowed.

Keep the sort of records the IRS expects from you. If you have or run a business, the presumption is that you're going to be a bit more professional in your record keeping than Joe Average. In fact, they might even expect you to keep "books." If you don't know how to keep books, get a decent bookkeeper, or get some help sorting it out. Lack of adequate records (or poorly kept records) is probably the single largest reason folks lose tax cases.

Don't ignore mail from the tax man. They are required to give you warning before taking certain (unfriendly) actions. If you ignore the warnings, bad things can happen. Tax collectors in this society are very powerful and can take almost everything you have if you give them a reason, so don't. If you don't know what to do about the notices, get a competent professional to assist. They can help you navigate through the situation.

Don't lie or cheat on your tax returns. It's one thing to take a position in good faith which might be controversial, it's another to just lie. It's the 21st century, and they have ways. Lying or cheating might work for a while, but sooner or later you might get "that" notice in the mail, and your life goes to hell.

Don't try to hide, they have computers. It might work for a while, but there's a good chance they'll catch up, and when they do....

Don't wait until it's too late. Don't show up at your tax advisor's office urgently seeking help the day before a deadline. Tax agencies are notoriously slow to respond to communication, and you might not have time to do what's needed and get the government to notice that before your assets start disappearing (or even worse, criminal charges start appearing). Sometimes it just takes time to get your data and strategy together and to get the government to understand that you really want to comply. Try to get the jump on a tax problem before it jumps on you.

Don't try to resolve any but the simplest of tax issues with tax agencies on your own. I hate to say it, but sometimes tax agencies seem to attract and hold onto the antisocial as personnel. There's nothing some of these boys like better than to rip up a defenseless citizen who doesn't know the rules of the game. There are lots and lots (and lots) of rules (some of which make great traps for the unwary), so be willing to get and pay for a competent professional to represent you and your interests if the situation goes anywhere past "easy."

Not all tax professionals are the same. There are all sorts out there — just plain (unenrolled) tax preparers, CPAs (certified public accountants), enrolled agents, tax attorneys. Each tends to specialize in something different (with exceptions, of course). The level of experience of any one practitioner can also make a huge difference. Tax law is ungodly complicated, and it takes years to get to know it passably well. Unenrolled preparers are at their best doing simple tax returns cheaply. CPAs are accountants, which is not the same as tax experts. They tend to specialize in handling books and financial statements, and do taxes as an "add-on." Tax attorneys litigate, meaning they handle cases in court, or those which might end up in court. Enrolled agents tend to prepare somewhat more complex returns and handle the nuts and bolts of everyday representation before tax agencies (tax audits, collections, and such). They do nothing but taxes and work with tax agencies on a daily basis, and they tend to be the most experienced when it comes to knowing the ins and outs of dealing with tax agencies. Having said all this, every person is different. It's up to you to size up what you need and see who's right for the job.

The IRS is not always right. Our office sees lots of notices sent to taxpayers that are just plain wrong. Also, lots of times tax auditors will take stupid or aggressive positions on things because their bosses are pushing them to raise revenue. When these things happen, a firm and competent defense is needed to preserve your interests; otherwise, you'll get run over by the bureaucracy. This principle also applies to what goes on a tax return. Sometimes, tax law is unclear as regards how it applies to a particular set of facts or circumstances. You could be justified in taking a position that the IRS might not agree with. However, it's part of the job of your tax preparer to analyze and evaluate the position and advise you accordingly. Assuming the position is not frivolous and has a reasonable chance of success, the final decision is yours.

Don't mess with payroll taxes. If you're an employer, or in a position of responsibility for an employer, make sure the payroll taxes are paid. These things do not go away, are collected ruthlessly, and can be assessed personally against anyone involved who bore any responsibility for their payment (or lack thereof), even if that responsibility was only on paper. Also, the penalties for late payment of these taxes are just horrendous and can double a debt fairly quickly. Our suggestion is to just make it your policy to pay the taxes right along with the payroll each time payroll is issued, and make sure the returns are filed on time.

Don't panic. If you've followed this advice, you should be defensible, even if you owe them some uncountable sum you can't pay. Just get a good tax person to help you through the mess. There are numerous solutions and protections available to you and your tax advisor, and something should work to handle, or at least minimize, the damage. Having said this, you should not expect a tax advisor to work miracles; for example, if you forgot to report some income and the IRS spots it, you're probably going to have to pay. However, a good advisor can not only minimize the penalties and fees, but can also help you get a payment deal you can actually live with.

Finally, the most important thing is, live! As long as you do these things, a good tax advisor can keep you out of most tax trouble. At that point you, Mr. or Ms. Goose, should feel free to go about your business without having to fear irrational demands for more and more of your feathers. Create jobs, create wealth, do whatever it is that you do, get back to laying a few golden eggs, and do it without trembling fear of the tax bogeyman. We all need you to do this. Otherwise, America will continue its downhill slide and take with it a substantial chunk of the light that this ol' world depends on.

William Truax, tax practitioner & financial consultant for 30 years, is founder of William D. Truax E.A. Tax Advisors (http://www.truax.net) in Glendale, CA--experts at tax prep, planning & representation. See more info at http://www.truax.net/?page_id=9 and his blog at http://www.truax.net/?cat=1

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Accounting Services

By: Orion Shell

Accounts are one field which requires a person to be extra cautious. You have to be very careful while performing any task in this field. It is very much similar to maths, but not the same. If you think that you are good at memorizing theory and doing something related to theory subjects then this is not the field for you. This area needs people who are good with practical problems and the ones who know what they are doing. Hence accounting cannot be done by everyone. The ones who have a clear base in this subject will be the masters in it.

Accounts are not only studied as a subject in schools and colleges. But, it is being widely used all over the world. If you look carefully you will see that it is present in everything that we do. For example, when we visit a shop, we buy clothes from there. The transaction of buying and selling clothes involves the accounting of money spent and gone. In this manner you will come across this field in your daily life. Various huge organizations need special people who are trained in this field. Accounting services are required by such organization in order to prepare regular records of their business transactions.

These people are professionals in this field and they are very much aware of what they do. Organizations like these are always in requirement of such people. They are huge businesses which deal with other huge businesses. They involve a lot of buying and selling. Therefore to keep a proper record of all these activities, the services of these professionals are needed. Such experts are trained from a renowned accounting institution and are very fluent with the subject. If any one of them has previously worked with any other organization then they are very experienced in it.

Such people are so much in demand. This is because this job requires a lot of attention and careful attitude. This kind of nature is not found in everybody. Hence everybody wants them. Accounting services of a person can be availed by looking at that person’s previous experience in this field. When you look at the previous experience you will see the amount of work done by him/her. On the basis of that you can recruit that person. Even the salary of these experts is extremely high. On an average, they earn way too much than a normal person.

Mature yet progressive firm, DKS&S is dedicated to clients like you who want to grow their companies and accumulate personal net worth and accounting for small business.Our experienced and talented outsourced accounting and business advisors work closely with your team,coaching your company to prosperity,success and productivity.

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Hiring Brisbane accountants - 5 key benefits you didn’t know

By: Prasanth Saravanabhava

Hiring Brisbane Accountants is one of the best decisions you can make for a number of reasons. They are experts in their field and can handle all of your accounting needs professionally and with excellence. They specialize in many fields so you can find an account that has knowledge and experience with what you are doing. Let’s delve down under into the top 5 benefits you derive from hiring the best Brisbane accountants firms in town.

1. One huge benefit of Brisbane Accountants is that they are entirely familiar with all the issues you may face. Because of their experience in the field helping others and also because they’ve dealt with the same things, they already know what to do to help you achieve your goals. You don’t have to worry about dealing with someone who has no clue how to handle your case and making a mess of things.

2. Another significant reason to choose these accountants is that they are friendly and helpful. There are a lot of accountants out there who just care about taking your money. They only put in the minimum amount of effort to secure your business. The Brisbane Accountants, however, go out of their way to do whatever they can to show that they value your business and you as well. They never make you feel like your business is an unwelcome burden.

3. Brisbane Accountants make sense for you because they do so much to make everything as convenient as possible for you. While they may love dealing with numbers and plans and financial institutions, they understand that you probably don’t. That’s why they work to find ways to minimize the amount of hassle you have to deal with. When you work with them, you can actually enjoy managing your finances rather than dreading it.

4. An impressive advantage of hiring Brisbane Accountants is that they make everything move along as quickly and smoothly as possible. When you are dealing with your finances and perhaps having to manage relations with multiple financial institutes, trying to get anything done can take forever. With an expert accountant from Brisbane, all of your business moves along faster because they know how to work within the system to avoid obstacles and redundancies that slow the progress of your affairs.

5. Another of the most compelling benefits of Brisbane Accountants is that they are a good choice for planning your future. In the financial world, people and companies can appear and disappear so quickly that it’s hard to keep track of them, and unfortunately, sometimes your account disappears with them. These highly experienced accountants have been around a long time and aren’t going anywhere, so you can feel confident that when you plan your future with your accountant, it’s going to still be there when you need it.

All of these reasons show why selecting the right accountants can make such a positive impact on your life. No matter what you need help with, be it taxation, wealth management, or anything else, getting someone that has ample experience makes everything smoother. That capability is why you can’t go wrong with Brisbane Accountants.

Prasanth is an author for Specialised Business Solutions(Sbs.net.au) site, Best accounting firm based in Brisbane. He has been writing articles on Brisbane accountants and property accountants in Brisbane for accounting firm.

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IRS Announces 2012 Inflation Adjustments, Once Again Highlighting the Need for Another Alternative Minimum Tax "Patch"

By: George Bauernfeind

As it does in the fall of every year, the IRS has calculated the effect that inflation has had on the income tax brackets that are used to compute the individual income tax, and it recently has announced what the tax brackets will be for 2012. These adjustments are required under the tax law, but they are limited to the Regular Tax brackets only – no similar adjustments are made for the Alternative Minimum Tax. Unless Congress specifically addresses the issue with another AMT Patch, this mismatch will result in approximately 25 million additional taxpayers becoming subject to the AMT in 2012.

The Patch

The Patch, as it is famously known, is the mechanism used by Congress to offset the failure of the tax law to automatically require an adjustment of the AMT brackets for inflation. This failure, with the resulting need for the annual Patch, has been going on since 2000, over a decade now. The reason for the constant one-year fixes, or "patches," is simple – it has been estimated that a permanent fix would cost in excess of one trillion dollars. While the one-year fixes in and of themselves are expensive, there is simply no way that Congress could ever find enough money to do a permanent fix in the absence of a complete overhaul of our U.S. tax system.

The AMT exemption

The actual Patch mechanism is the making of an adjustment to the Alternative Minimum Tax exemption amount. For a married couple filing a joint return, for 2011 the exemption amount is $74,450 (other filing statuses have different exemption amounts). What this means is that taxable income for AMT purposes will be $74,450 less than what it otherwise would be, after increasing Regular Tax taxable income for the numerous AMT adjustment items. The purpose of this is to ensure that folks at lower levels of taxable income, and folks who don’t have very many AMT items, are not caught in the AMT net.

What happens if there is no Patch

If Congress does not enact another Patch, the exemption amount will drop significantly, all the way back to what it was in 2000. For a married couple, this would equate to an exemption of only $45,000 – 40 percent less than what it is today. This substantial drop in the exemption would result in the 25 million additional AMT payers mentioned above.

When will Congress act?

Although one can never predict when Congress will get around to doing things, as we have seen time and time again Congress does tend to postpone dealing with difficult issues until the very last moment. Thus, even though these 25 million individuals technically become AMT payers on January 1, 2012, the average time it has taken Congress to enact the Patch is seven months into the tax year. Thus, if they followed this average we won’t know until July, 2012 what the revised exemption amount is. But don’t’ assume July - twice during the past decade it has actually taken Congress until December to enact the Patch.

The "Patch watch"

Congress knows what it needs to do. All that can be done is to wait, and watch and monitor the goings-on in Washington. Future articles will be doing exactly this, and reporting on any developments when they occur.

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator/planner to help you reduce your Alternative Minimum Tax. Visit http://amtindividual.com or http://amtblog.com for access to this tax software and to read more tax planning articles on the Alternative Minimum Tax.

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A HMRC Tax Return Can Be Done Online

By: Phoenix Delray

More people are choosing to file an HMRC tax return online. While some continue doing it by completing paperwork by hand and mailing it in, using the net to submit information has become more popular for many reasons.

One advantage to this method is ease of use. Individuals or businesses can use it. The software that is used to file is fairly straightforward and easy to use. It walks users through each step. While it is possible to buy third party software to use for taxes, the HMRC website itself contains a way for people to use it. There are several advantages to using this site. One is that is it free and no software purchase is required. Another is that it has many tools on the site to help users determine how to use it.

Another option is to hire a company that specializes in tax preparation. These companies can help businesses or individuals file their returns for a fee. This is ideal for the person that dislikes doing this type of task himself or herself or is short on time. Because these companies do this type of work all the time, they are current on any changes to tax law. They also know the answers to questions that may arise. These companies are also able to help anyone who may be owed a refund from over payment from previous years.

Those who file online will need to have some information about wages and other things for the period of time they are going to work on. They will be asked about a time period that runs from April 6 of one year to April 5th of the next year. Much of the first parts of the form will ask questions about if the form is being used for a business or an individual. The form will walk the user through each step and ask them if they received any income from things like pensions, interest or dividends. The form will ask various questions such as if the person filing will use a married couples allowance and other things that factor into the information.

There may be other circumstances that alter how much tax is paid in or received as a refund. People who work overseas have different requirements. Those who rent out a room of their home or have other rental property may have to fill out additional questions. There are many different circumstances to an HMRC tax return.

For more information on hmrc tax return, please visit our website.

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Who Can Benefit from the Alternative Minimum Tax Credit?

By: George Bauernfeind

With few exceptions, when the Alternative Minimum Tax is paid it is money out the door - gone forever. No surprise here since this is the way taxes work. What is a surprise to many folks, however, is that a portion of the AMT paid in one year may instead simply be a prepayment of taxes – referred to as a "credit" - that may be available as a refund in a future year. Understanding which AMT items generate this future credit and which don’t can result in additional tax savings.

AMT items that are "exclusion items"

There are many different kinds of deductions allowed in computing taxable income. For the AMT, a distinction is made between those that are "exclusion" items and those that are not. Exclusion items are those that are either deductible or not in the year paid – they have no impact on future years. Common examples of these are the various itemized deductions that are allowed for the Regular Tax but not for the Alternative Minimum Tax.

AMT items that are not exclusion items

A distinction is made between exclusion items, and those AMT items that affect only the timing of when a deduction is taken. The most common example of this is Depreciation. A deduction for depreciation of business or certain investment assets is allowed both for the Regular Tax as well as the Alternative Minimum Tax, but if a taxpayer chooses an accelerated form of depreciation for Regular Tax purposes he is getting a disproportionately larger deduction in the early years of the asset’s life. The AMT says "no" to this – the acceleration needs to be slowed down a little.

AMT items that are not exclusion items – specific examples

Below is a list of the Alternative Minimum Tax items that are not exclusion items, and, thus, to the extent a taxpayer is paying the AMT as a result of any of these items, that portion of the AMT is eligible to be taken as a credit against future taxes owed by the individual (line references shown are to the 2010 Form 6251):

• Investment interest expense – line 8
• AMT net operating loss deduction – line 11
• Incentive stock options – line 14
• Estates and trusts – line 15
• Electing large partnerships – line 16
• Disposition of property – line 17
• Depreciation – line 18
• Passive activities – line 19
• Loss limitations – line 20
• Circulation costs – line 21
• Long-term contracts – line 22
• Mining costs – line 23
• R & D costs – line 24
• Certain installment sales – line 25
• Intangible drilling costs – line 26

Form used to report the credit

IRS Form 8801 is the tax form used to calculate the amount of credit that may be taken in the current year for prior years’ AMT paid. This form pulls data from the prior year’s Form 6251, and uses it to compute how much of the AMT paid in the prior year is attributable to exclusion items. The difference, if any, between the total AMT paid in the prior year and this recomputed amount is the amount of AMT available as a credit in the current year.

Credit is taken against the Regular Tax

The AMT credit carryover may be taken as a reduction of the current year’s Regular Tax. Thus, if the taxpayer is in the AMT again, the credit can’t yet be used, but it will accumulate and be carried to a future year when the Regular Tax is paid. Under a special rule, however, if after three years the credit carryover hasn’t been used, 50% of it may be used against the taxpayer’s then-current year AMT.

Case study – Sarah Palin’s tax return

During the 2008 Presidential campaign, as is common practice the candidates for office released copies of their tax returns. The tax return filed by Sarah Palin and her husband for 2006 included a Form 8801, which was used to test whether there was an AMT credit carryover from prior years. While the prior years’ returns were not released, it was interesting to note that Todd Palin was self-employed in several businesses that utilized vehicles and equipment that were depreciable for tax purposes. Because these assets were depreciated using the most accelerated method possible, the AMT had been paid by them in prior years.

Conclusion

Alternative Minimum Tax payers are doing a real disservice to themselves if they fail to test for the AMT credit carryover each year. Depending on the types of AMT items a taxpayer has, and their relative sizes, taxpayers may find a pleasant surprise in the form of a refund of prior year AMT paid!

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator/planner to help you reduce your Alternative Minimum Tax. Visit http://amtindividual.com or http://amtblog.com for access to this tax software and to read more tax planning articles on the Alternative Minimum Tax.

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IRS Audits 419, 412i, Captive Insurance Plans With Life Insurance, and Section 79 Scams

By: Lance Wallach

The IRS started auditing 419 plans in the ‘90s, and then continued going after 412i and other plans that they considered abusive, listed, or reportable transactions. Listed designated as listed in published IRS material available to the general public or transactions that are substantially similar to the specific listed transactions. A reportable transaction is defined simply as one that has the potential for tax avoidance or evasion.

In a recent Tax Court Case, Curcio v. Commissioner (TC Memo 2010-15), the Tax Court ruled that an investment in an employee welfare benefit plan marketed under the name "Benistar" was a listed transaction in that the transaction in question was substantially similar to the transaction described in IRS Notice 95-34. A subsequent case, McGehee Family Clinic, largely followed Curcio, though it was technically decided on other grounds. The parties stipulated to be bound by Curcio on the issue of whether the amounts paid by McGehee in connection with the Benistar 419 Plan and Trust were deductible. Curcio did not appear to have been decided yet at the time McGehee was argued. The McGehee opinion (Case No. 10-102) (United States Tax Court, September 15, 2010) does contain an exhaustive analysis and discussion of virtually all of the relevant issues.

Taxpayers and their representatives should be aware that the Service has disallowed deductions for contributions to these arrangements. The IRS is cracking down on small business owners who participate in tax reduction insurance plans and the brokers who sold them. Some of these plans include defined benefit retirement plans, IRAs, or even 401(k) plans with life insurance.

In order to fully grasp the severity of the situation, one must have an understanding of Notice 95-34, which was issued in response to trust arrangements sold to companies that were designed to provide deductible benefits such as life insurance, disability and severance pay benefits. The promoters of these arrangements claimed that all employer contributions were tax-deductible when paid, by relying on the 10-or-more-employer exemption from the IRC § 419 limits. It was claimed that permissible tax deductions were unlimited in amount.

In general, contributions to a welfare benefit fund are not fully deductible when paid. Sections 419 and 419A impose strict limits on the amount of tax-deductible prefunding permitted for contributions to a welfare benefit fund. Section 419A(F)(6) provides an exemption from Section 419 and Section 419A for certain "10-or-more employers" welfare benefit funds. In general, for this exemption to apply, the fund must have more than one contributing employer, of which no single employer can contribute more than 10% of the total contributions, and the plan must not be experience-rated with respect to individual employers.

According to the Notice, these arrangements typically involve an investment in variable life or universal life insurance contracts on the lives of the covered employees. The problem is that the employer contributions are large relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement, and the trust administrator may obtain cash to pay benefits other than death benefits, by such means as cashing in or withdrawing the cash value of the insurance policies. The plans are also often designed so that a particular employer’s contributions or its employees’ benefits may be determined in a way that insulates the employer to a significant extent from the experience of other subscribing employers. In general, the contributions and claimed tax deductions tend to be disproportionate to the economic realities of the arrangements.

Benistar advertised that enrollees should expect to obtain the same type of tax benefits as listed in the transaction described in Notice 95-34. The benefits of enrollment listed in its advertising packet included:
Virtually unlimited deductions for the employer;
Contributions could vary from year to year;
Benefits could be provided to one or more key executives on a selective basis;
No need to provide benefits to rank-and-file employees;
Contributions to the plan were not limited by qualified plan rules and would not interfere with pension, profit sharing or 401(k) plans;
Funds inside the plan would accumulate tax-free;
Beneficiaries could receive death proceeds free of both income tax and estate tax;
The program could be arranged for tax-free distribution at a later date;
Funds in the plan were secure from the hands of creditors.

The Court said that the Benistar Plan was factually similar to the plans described in Notice 95-34 at all relevant times.

In rendering its decision the court heavily cited Curcio, in which the court also ruled in favor of the IRS. As noted in Curcio, the insurance policies, overwhelmingly variable or universal life policies, required large contributions relative to the cost of the amount of term insurance that would be required to provide the death benefits under the arrangement. The Benistar Plan owned the insurance contracts.

Following Curcio, as the parties had stipulated, on the question of the amnesty paid by Mcghee in connection with benistar, the Court held that the contributions to Benistar were not deductible under section 162(a) because participants could receive the value reflected in the underlying insurance policies purchased by Benistar—despite the payment of benefits by Benistar seeming to be contingent upon an unanticipated event (the death of the insured while employed). As long as plan participants were willing to abide by Benistar’s distribution policies, there was no reason ever to forfeit a policy to the plan. In fact, in estimating life insurance rates, the taxpayers’ expert in Curcio assumed that there would be no forfeitures, even though he admitted that an insurance company would generally assume a reasonable rate of policy lapses.

The McGehee Family Clinic had enrolled in the Benistar Plan in May 2001 and claimed deductions for contributions to it in 2002 and 2005. The returns did not include a Form 8886, Reportable Transaction Disclosure Statement, or similar disclosure.

The IRS disallowed the latter deduction and adjusted the 2004 return of shareholder Robert Prosser and his wife to include the $50,000 payment to the plan. The IRS also assessed tax deficiencies and the enhanced 30% penalty totaling almost $21,000 against the clinic and $21,000 against the Prossers. The court ruled that the Prossers failed to prove a reasonable cause or good faith exception.

More you should know:

In recent years, some section 412(i) plans have been funded with life insurance using face amounts in excess of the maximum death benefit a qualified plan is permitted to pay. Ideally, the plan should limit the proceeds that can be paid as a death benefit in the event of a participant’s death. Excess amounts would revert to the plan. Effective February 13, 2004, the purchase of excessive life insurance in any plan makes the plan a listed transaction if the face amount of the insurance exceeds the amount that can be issued by $100,000 or more and the employer has deducted the premiums for the insurance.
A 412(i) plan in and of itself is not a listed transaction; however, the IRS has a task force auditing 412i plans.
An employer has not engaged in a listed transaction simply because it is in a 412(i) plan.
Just because a 412(i) plan was audited and sanctioned for certain items, does not necessarily mean the plan is a listed transaction. Some 412(i) plans have been audited and sanctioned for issues not related to listed transactions.

Companies should carefully evaluate proposed investments in plans such as the Benistar Plan. The claimed deductions will not be available, and penalties will be assessed for lack of disclosure if the investment is similar to the investments described in Notice 95-34. In addition, under IRC 6707A, IRS fines participants a large amount of money for not properly disclosing their participation in listed or reportable or similar transactions; an issue that was not before the Tax Court in either Curcio or McGehee. The disclosure needs to be made for every year the participant is in a plan. The forms need to be properly filed even for years that no contributions are made. I have received numerous calls from participants who did disclose and still got fined because the forms were not prepared properly. A plan administrator told me that he assisted hundreds of his participants file forms, and they still all received very large IRS fines for not properly filling in the forms.

IRS has been attacking all 419 welfare benefit plans, many 412i retirement plans, captive insurance plans with life insurance in them, and Section 79 plans.

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Pubic Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com or visit www.taxadvisorexpert.com.
The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

wallachinc@gmail.com or visit www.taxadvisorexpert.com.

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IRS Releases 2011 Version of Form 6251 - Time to Start Thinking about Year-End Tax Planning

By: George Bauernfeind

The IRS recently released its 2011 version of the Form 6251 – Alternative Minimum Tax – Individuals. With year-end only a few months away, this serves as a timely reminder that anyone stuck in the AMT needs to start thinking about the ways they can reduce this burden. The most effective AMT planning strategies must be implemented by December 31 in order to have any impact on the current year’s taxes. This article provides a general overview of some of the important of these planning strategies.

AMT exemption amount

Late last year Congress once again adjusted the AMT exemption amount for inflation - for 2011 it is $74,450 for married couples filing a joint income tax return and $48,450 for singles. While Congress hasn’t even started thinking about the "patch" that will be needed again on January 1, 2012, we can guess that at some point that will be taken care of.

Phaseout of the exemption

For taxpayers whose incomes reach a certain level, the exemption is gradually phased out. This phaseout is at the rate of $1 of exemption lost for every $4 of income above the threshold. For 2011 the threshold for marrieds filing jointly is $150,000, and for singles it is $112,500. If a couple’s income is $160,000, for example, the exemption is reduced by $2,500. If the couple’s taxable income reaches $447,800, the exemption is zero.

Capital gains and dividends

While capital losses may be more typical these days due to the stock market’s wild gyrations, it’s important to note the AMT impact that results from capital gains as well as dividend income. These sources of income are taxed at the same 15% rate for both the AMT as well as the Regular Tax, but there is a direct impact on an individual’s AMT burden because of the exemption phaseout discussed above. For example, a $10,000 capital gain by itself can result in $700 of AMT being paid (loss of $2,500 of exemption times the marginal AMT rate of 28%).

Itemized deductions – state and local income taxes

The one item that affects the greatest majority of folks stuck in the Alternative Minimum Tax is the itemized deduction for state and local income taxes. While allowable for the Regular Tax, this deduction is disallowed in its entirely for the AMT. For taxpayers who expect to be in the AMT for 2011, serious consideration should be given to postponing payment of some portion of these taxes into 2012. If the taxpayer is not in the AMT in 2012, real tax dollars can be saved that otherwise would have been "wasted" by not ding this basic planning.

Itemized deductions – property taxes

The next biggest item in terms of AMT exposure is property taxes which, similar to state and local income taxes, are not deductible in computing the Alternative Minimum Tax. Many taxpayers receive their property tax bills in the fall, with a period of months before the taxes are actually due. Just as with the state income tax planning mentioned above, taxpayers currently in the AMT might be better off pushing the payment of these property taxes into 2012.

Other AMT items
There are quite a few other AMT items in addition to those mentioned above. Some of these items are deductions from income that are allowed for Regular Tax purposes but not allowed for the AMT, while others are certain types of income that are treated differently for the Alternative Minimum Tax. The Form 6251, available on the IRS’ web site, serves as a list of all of these items. Taking a look at last year’s tax return serves as a great starting point to see which items are likely to affect the taxpayer again this year.

The value of planning

The average amount of AMT paid by each taxpayer caught in its tentacles is over $5,000. Just a little bit of time spent on basic tax planning can result in some significant amounts being saved!

George Bauernfeind is with AMTIndividual.com, providing analysis, customized strategies, and an online dual tax calculator/planner to help you reduce your Alternative Minimum Tax. Visit http://amtindividual.com or http://amtblog.com for access to this tax software and to read more tax planning articles on the Alternative Minimum Tax.

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Should you File, and then Opt Out?

By: Lance Wallach

February 8, 2011, the IRS 2011 Offshore Voluntary Disclosure Initiative (OVDI) program is a welcome but conditional amnesty allowing taxpayers with foreign accounts to come clean and get into compliance with the IRS. The program runs through Sept. 9, 2011.
There’s been discussion of "opting out" of the program to take your chances in audit, but it’s a topic fraught with danger. Now, however, there is guidance about opting out of the program that makes much of it transparent. Because of this late date it is recommended that you properly file FBARs and the 90-day request for amnesty extension. This is the first important step. If the forms are not done properly, you will have extensive problems and will not have to think about opting out. If your forms are properly done and filed, then your situation should be discussed with someone who is experienced in these matters.

Under the OVDI, taxpayers are subject to a penalty of 25 percent of the highest aggregate account balance on their undisclosed account(s) between 2003 and 2010. If the value was less than $75,000 at all times during those years, the penalty is only 12.5 percent.
These account balance penalties are in lieu of all other penalties that may apply, including FBAR and offshore-related information return penalties. Plus, participants are required to pay taxes and interest on any monies (such as interest income on foreign accounts) they previously failed to report. Finally, they must pay an accuracy-related penalty equal to 20 percent of the underpayment of tax, plus interest.
Opting out of the program can make sense for some, though it involves taking your chances with an IRS examination. Someone should represent you with extensive experience in this. We always suggest they should at least be a CPA with years of experience in international tax. It’s even better if you use one that was with the international tax division of the IRS for a number of years. The IRS has published a separate guide detailing the rules and procedures for opting out.
Here are some of the rules:
1. IRS Summary. The IRS employee who has been handling your case summarizes it, agreeing or disagreeing with your view of penalties, and listing how extensive an audit he or she recommends.
2. Program Status Report. Before you can opt out, the IRS sends a letter reporting on the status of your disclosure and what you still must submit. If you’ve given enough data, the IRS will calculate what you would owe under the OVDI. You should provide any missing items within 30 days.
3. Taxpayer Submission. Within 20 days, the taxpayer opts out in writing and makes a written case what penalties should apply and why.

4. Central Committee. A Committee of IRS Managers reviews the summary and decides how extensive an audit to conduct. The IRS says "the taxpayer is not to be punished (or rewarded) for opting out." The Committee also decides whether to assign your case for a normal civil audit or to assign it for a criminal exam.
5. Written Warning. The IRS sends another letter explaining that opting out must be in writing and is irrevocable. You have 20 days thereafter to opt out in writing.
6. Interview? Some audits will include taxpayer interviews.
Bottom Line? The "opt out" procedure is helpful but still a bit daunting. If you are considering it, make sure you get some solid advice from an experienced person who, in my opinion, should have worked for the IRS and is a CPA about the nature of your case. This is just one of the many options that should be discussed with your advisor. There are many other strategies that you may want to utilize. Your advisor should be aware of all your options, and should explain them. If not, consider engaging someone else. Remember, the penalties can be very large, especially if your advisor is not skilled at this. There is even the potential for criminal prosecution. See taxadvisorexpert.com for the latest information in this area or to contact one of our professionals today.

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, international tax, and other subjects. He writes about FBAR,OVDI, international taxation, captive insurance plans and other topics. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Pubic Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, lawallach@aol.com,lanwalla@aol.com or visit www.taxadvisorexpert.com.
The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

IRS 2011 Offshore Voluntary Disclosure Initiative (OVDI)

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