The IRS disclosed the formation of a Global High Wealth Exam Group whose task is to ensure rich taxpayers are fulfilling their responsibility to pay their taxes. How much money does one need to make in order to fall into the category of ‘wealthy’ is not clear but word has it that we’re talking about those who are worth tens of millions of dollars. As an indication, in 2004 there were approximately 47 individuals whose net worth was $20 million or more.
With the formation of this Global High Wealth Exam Group, the wealthy would have to account for how they acquire and maintain their wealth to the IRS. It has been long known that some wealthy Americans and non-Americans hide their assets in offshore accounts. This has come to light especially last year when in the US alone, 15,000 wealthy taxpayers confessed to maintaining foreign bank accounts they had previously not disclosed to the IRS.
But the task of the Global High Wealth Exam Group is not limited to only nabbing errant tax evaders. It is also to properly review their complex financial dealings for taxation. This is more daunting a task than many would expect. These days, the financial dealings of the wealthy no longer only come in the form of wages, dividends, interests, capital gains, profits gained from some business venture or funds acquired a law firm or accounting firm. These days, the wealthy dabble in such ventures as multi-tiered partnerships, trust arrangements, private equity and hedge funds and private foundations, and to make matters more complicated, half of these may be in foreign countries.
This cannot be the work of only one IRS agent, thus the notion of a team of agents that form the Global High Wealth Exam Group was established. These so-called ‘wealth squads’ will comprise of agents with the necessary skills to be able to examine both the individual taxpayers and the related entities to ensure that their incomes and the way the incomes are derived are properly accounted for and accurately reported to the IRS.
The Global High Wealth Exam Group will be made up of revenue agents, partnership experts and international examiners who specialize in areas like financial instruments, exempt organizations, retirement plans, annuities and insurance schemes. There could also be a criminal investigation agent or two in the group.
In light of these developments, it behooves the rich taxpayers to be prepared for more intense scrutiny when it comes tax season.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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The US Supreme Court upheld the decision of the Appeals Court in granting the IRS the right to procure legal work papers from corporations. The IRS had some time ago, demanded such papers from corporate jet maker Textron Inc. but the tax agency’s action was challenged in court. However, Textron failed to win the case and the lower court ruled in favor of the IRS. In support of its case, Textron, on the other hand, argued that the papers should be classified privileged information and made their appeal to the Supreme Court.
Textron is not the only company concerned with the divulging of the information contained in the legal work papers to the IRS. Other corporate companies were also worried that if the IRS obtains the right to such papers, it could mean unrestricted access by the IRS to legal advice given to the corporations, such as the advice lawyers give about taxes. Furthermore, there was also the possibility that such a ruling might be applied to other areas beyond taxes, such as product safety cases.
Textron had withheld certain documents when demanded by the IRS. Among them was a spreadsheet compiled by its lawyers that listed out areas of potential dispute with the IRS and the chances of the company coming out tops in the dispute. But with the Supreme Court ruling, such a document would have to be surrendered upon demand to the IRS.
When the US Court of Appeals for the First Circuit ruled in favor of the IRS having the right to such legal work papers, it set a new benchmark whereby every party in commercial litigation will be able to get their hands on documents that give details of its exposure when their opponents file financial statements with contingent liabilities for litigation. This would effectively remove all protection on the type of attorney analysis such as was present in the case of Textron. Many lawyers in corporate law feel that with such far reaching powers given to the IRS to look into the legal matters of corporations, the confidentiality in the lawyer client relationship will be severely compromised. Many expressed their surprise that the Supreme Court did not see it this way.
In a related matter, the IRS has proposed that all companies be mandated to estimate and enumerate their maximum federal tax liability relating to ‘uncertain’ tax positions which are positions that the companies believe could be challenged by tax authorities.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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The city of Austin, Texas had to transfer funds into an account to make payments on Build America Bonds that were sold last year as the IRS withheld a subsidy amounting to $617,284.
The reason for the retention of the subsidy by the IRS was the state capital’s failure to pay its dues on payroll taxes according to a letter to the city treasurer, Art Alfaro dated February 15. The subsidy was meant for a debt service payment due March 1. Hence, Alfaro utilized reserve funds and transferred it into an account to make the payments on time.
However, the city still owes the IRS another $35,000 and this may be withheld from another subsidy for a Sept. 1 payment. But Alfaro contends that the issue will be settled between city officials and the IRS long before that date.
As part of measure to stimulate the economy last year, Congress authorized the sale of Build America Bonds to the general public. These bonds bring along with them a direct 35% subsidy from the federal government given to the state governments or municipalities who issue the bonds rather than a tax exemption for the investors. To-date, a total of $105.7 billion worth of taxable Build America Bonds were sold by state governments and municipal authorities since it launched. Out of the entire $2.8 trillion municipal bond market, Build America Bonds are the fastest growing segment.
Perhaps in a knee-jerk reaction over the IRS’ withholding of subsidy from Austin, Florida has stopped issuing Build America Bonds since March amidst fears that the IRS would withhold its subsidy should its municipality fail to pay the federal government for other programs like Medicaid.
One major advantage the municipalities have in selling Build America Bonds is that in certain cases, the subsidy from the federal government lowers their borrowing costs to lower that of bonds with interest income that isn’t subject to federal tax. As such, Congress is considering extending the scheme which was originally due to expire by end of this year but with a lower subsidy under a pending jobs bill.
Thus far, the city of Austin has sold $78.5 million of Build America Bonds to finance public works projects. The city also intends to sell debts worth $200 million to raise funds for its electric system next month. Out of this amount, slightly more than half or $100.9 million is expected to be from selling more Build America Bonds.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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A new ruling by the Justice Department may give the IRS its long-awaited access to the accounts of tax delinquent federal employees, retirees and military service personnel currently held in the Thrift Savings Plan (TSP). On May 3, the Justice Department's Office of Legal Counsel ruled that the Internal Revenue Code allowing property garnishments should override the 1986 law that created TSP and protected its accounts from being levied.
The TSP is governed by the Federal Retirement Thrift Investment Board which has long rejected all IRS attempts to seize the retirement savings of its participants. Up to now, the IRS has only been able to seize the wages of federal employees to repay tax debts under the Federal Payment Levy Program, but not retirement savings. But the Department of Justice’s ruling has opened the way for the IRS to seize participants’ accounts in the same way it does for the 401 (k) accounts of those who work in the private sector. The TSP Executive Director Gregory Long has conceded in a May 17 meeting that they would have to eventually comply with Justice’s ruling.
In order to allow the IRS to garnish TSP accounts, Congress would have to change the Federal Employees' Retirement System Act that governs the TSP. The House Oversight and Government Reform subcommittee on the federal workforce, Postal Service and District of Columbia is now looking into the matter. If Congress does not amend the Act, then a lawsuit is the likely eventuality.
The thing that the TSP fears for its participants is the possibility of other parties also staking a claim on their accounts for other forms of debt should the Act be revised. Dan Adcock, legislative director for National Active and Retired Federal Employees expressed his concern that retirement savings should be kept safe from deductions for more trivial types of debts like parking fees. Should the Act be changed to allow IRS access to TSP accounts, Adcock wants to ensure that federal employees are given the same rights to appeal and due process as private sector workers.
The IRS says that as of December 2009, 97,200 federal employees and almost 56,200 active-duty and reservist military service members, 41,000 civilian retirees and 81,900 military retirees were behind on their taxes. These almost 276,000 federal tax delinquents owe the IRS a combined total of $3 billion.
There are some cases where the IRS can already garnish federal employees’ TSP accounts. These include paying for child support, alimony and paying for costs related to a child abuse judgment. If a federal employee is convicted of a national security offense, his matching contributions, agency automatic contributions and any money earned from those contributions can also be confiscated. But his own contributions and related earnings cannot be garnished.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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Sherry Peal Jackson, a former IRS agent who was imprisoned on February 14, 2008 for acting on her belief that the government's collection of income tax is illegitimate, is due to be released August 8, 2011. But her husband, Colin Jackson told the American Free Press that his wife, a certified accountant and mother of two with no prior record, has been placed in solitary confinement for the last 5 months despite having a serious medical condition, when most hardened criminals are only put there for no more than 90 days.
Sherry has been suffering from a hyperactive thyroid gland that causes an increased heart rate and chest pains since a little less than a year ago. Despite that, the prison authorities moved her from her original prison, the Coleman, Florida federal prison, to the Federal Correction Institution in Tallahassee, Fla. because the prison in Coleman does not have a solitary confinement cell whereas the other one does. This gave the impression to her husband that Sherry is being punished for the attention her case was receiving.
Sherry had written to the local congressman, Hank Johnson (D-Ga.) alleging that the prison authorities were slow in getting her the medical care she needed for her condition. A copy of the letter was sent to her husband. Mr. Johnson then revealed the contents of the letter to several supporters and friends. As the news spread, many people started writing and calling the prison and the local congressman's office, tying up their phone lines for 2 or 3 days.
It was shortly after that when Sherry was transferred to solitary confinement in Tallahassee for what prison authorities claim was for her 'protection'. Apparently, one letter the prison authorities received contained a threatening message to the effect of 'we are watching you', though not in those exact words. The prison system is now investigating this matter, as are the FBI. But whether the transfer was actually a vindictive move by the prison authorities and/or the local congressman is open to speculation. In a move seemingly to deny responsibility over the issue, a representative of Congressman Johnson claimed that his office had no authority to act in this matter.
But one piece of good news is that Sherry's case has received an evidentiary hearing scheduled to be held next month. It appears the judge felt that there was sufficient evidence or points of interest for Sherry to be heard again. The evidentiary hearing would focus on any evidence that should have been presented but weren't. If the judge's verdict in the hearing is favorable, Sherry could be released as early as this summer.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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