Monday, February 20, 2017

IRS Warns Taxpayers of Surge in Automated Phone Scam Calls; Requests for Fake Tax Payments Using iTunes Gift Cards & other tax related BS

Selig & Associates 
The most Aggressive Tax Representation allowed by Law

The Internal Revenue Service today warned taxpayers to stay vigilant against an increase of IRS impersonation scams in the form of automated calls and new tactics from scammers demanding tax payments on iTunes and other gift cards.


The IRS has seen an increase in “robo-calls” where scammers leave urgent callback requests through the phone telling taxpayers to call back to settle their “tax bill.”

These fake calls generally claim to be the last warning before legal action is taken. Once the victim calls back, the scammers may threaten to arrest, deport or revoke the driver’s license of the victim if they don’t agree to pay.

“It used to be that most of these bogus calls would come from a live-person. Scammers are evolving and using more and more automated calls in an effort to reach the largest number of victims possible,” says the Big Cheese “IRS Commissioner John Koskinen”.

“Taxpayers should remain alert for this summer surge of phone scams, and watch for clear warning signs as these scammers change tactics.” 

In the latest trend, IRS impersonators are demanding payments on iTunes and other gift cards. The IRS reminds taxpayers that any request to settle a tax bill by putting money on  any form of gift card is a clear indication of a scam.

Some examples of the varied tactics seen this year are:

    Demanding payment for a “Federal Student Tax.” See IR-2016-81.

    Demanding immediate tax payment for taxes owed on an iTunes or other type of gift card

    Soliciting W-2 information from payroll and human resources professionals. See IR-2016-34.

    “Verifying” tax return information over the phone. See IR-2016-40.

    Pretending to be from the tax preparation industry. See IR-2016-28

Since these bogus calls can take many forms and scammers are constantly changing their strategies, knowing the telltale signs is the best way to avoid becoming a victim.  

Aggressive Selig & Associates provides the most aggressive tax representation allowed by law. Specializing in payroll, income and sales tax controversies for individuals, contractors, restaurants, bodegas and professional practices. 

Mission Statement Our mission is to win every tax case; to bring all of our tax, advocacy and legal expertise to every fight, and to serve our clients with integrity, honesty and perseverance.

Effective We settle contested tax audits, compromise tax debts and can resolve all marital tax issues including innocent spouse relief and separation of liability. 


Reasonable-Rates All tax representation is provided by a Federal Tax Practitioner and Licensed Attorney. To schedule a FREE face-to-face consultation, contact Selig & Associates today. 

Sunday, February 19, 2017

Misclassifying Employees as Independent Contractors

Employer misclassification of employees as independent contractors is a widespread phenomenon in the United States. The Internal Revenue Service estimates that employers have misclassified millions of workers nationally as independent contractors. While some employers misclassify their workers as independent contractors in error, often employers misclassify their employees intentionally in order to reduce labor costs and avoid paying state and federal taxes. The distinction between genuine independent contractors and employees misclassified as independent contractors, while complicated, is a crucial matter. While the definition of misclassification is a function of a complex set of statutes and policies set forth by federal and state agencies, the effect on employees is straightforward. Misclassified employees lose workplace protections, including the right to join a union; face an increased tax burden; receive no overtime pay; and are often ineligible for unemployment insurance and disability compensation. Misclassification also causes federal, state, and local governments to suffer revenue losses as employers circumvent their tax obligations.

Defining Independent Contractor

An independent contractor provides a good or service to another individual or business, often under the terms of a contract that dictates the work outcome, but the contractor retains control over how they provide the good or service. The independent contractor is not subject to the employer’s control or guidance except as designated in a mutually binding agreement. The contract for a specific job usually describes its expected outcome. Essentially, independent contractors treat their employers more like customers or clients, often have multiple clients, and are self-employed.

For some professionals, the line between employee and self-employed independent contractor is often blurred, and employers can classify workers as either. There are several different standards used to determine if an individual is legally an independent contractor. While the intricacies of contracting are too numerous for a comprehensive treatment and the applicability of the test depends on the specific workplace situation, generally, the independent contractor tests employed by the IRS and the Department of Labor (DOL) offer useful guidelines as to who is and who is not an independent contractor.

Internal Revenue Service Test

The IRS has a stake in identifying the misclassification of employees because it typically results in lost tax revenue. However, the IRS does not have one set of qualifications that it uses to determine the status of “employee” or “independent contractor.” Instead, the IRS looks at a number of factors that help it determine whether an employer has the right to control the details of how the worker(s) performs the services. Generally, if the employer controls the services the worker performs, then the worker is an employee, not an independent contractor. According to the IRS, the facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral

Does the company control or have the right to control the worker as well as how the worker does his or her job? For example, if a company provides training for the worker, this signals an expectation to follow company guidelines and therefore indicates that the worker is likely an employee.

Financial

Are the business aspects of the worker’s job controlled by the payer? (These include things like how a worker is paid, whether expenses are reimbursed, who provides tools, supplies, etc.). Only an independent contractor can realize a profit or incur a financial loss from his or her work.

Type of Relationship

Are there written contracts or employee-type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue, and is the work a key aspect of the business?

The issue of who has the right to control is often not clear-cut and the tax code does not define “employee.” Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor.

The DOL Economic Reality Test

The DOL has an interest in ensuring accurate classification because only employees receive Fair Labor Standards Act (FLSA) benefits (Federal minimum wage, overtime pay, etc.). The DOL uses an “economic reality test” to determine who is an employee and, thus, eligible for FLSA benefits, by trying to establish whether the worker is economically dependent on the supposed employer. According to the DOL, “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.”

The DOL derives its position from judicial precedent. As the U.S. Supreme Court has not established a single rule or test for determining whether an individual is an independent contractor or an employee, the DOL stresses seven factors the Court has considered significant:
1.    The extent to which the services rendered are an integral part of the principal’s business.
2.    The permanency of the relationship.
3.    The amount of the alleged contractor’s investment in facilities and equipment.
4.    The nature and degree of control by the principal.
5.    The alleged contractor’s opportunities for profit and loss.
6.    The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7.    The degree of independent business organization and operation.


These seven factors of the economic reality test aim to assist employers in determining employee or independent contractor status, but in most cases, common sense judgments are sufficient. An employee who only invests time in one enterprise and who sells his or her services to only one “customer,” the employer, is economically dependent upon that work. An independent contractor is in business for him or herself, invests in his or her own equipment and supplies, and has a broad customer base.

Saturday, February 18, 2017

What the Hell is Tax Fraud?





What the hell is tax fraud?

Tax Fraud occurs when individuals working and earning income knowingly and intentionally fail to file their income tax return or falsify information on a tax return.

Failing to state the correct amount of earned income, overstating deductions and exemptions and falsifying documents are all possible elements of tax fraud and are punishable in both criminal and civil jurisdictions. 

The process of concealing or transferring income and reporting personal expenses as business expenses are also examples of tax fraud and are actual violations of the law.

How IRS Criminal Investigations Work

IRS Criminal Investigations ("CI") is the law enforcement branch of the IRS. CI’s are conducted on taxpayers who willfully, knowingly and intentionally violate their legal requirement to file their tax returns and pay their taxes every year.

Tax Crimes and IRS Charges


Criminal Investigations can charge individuals with a number of crimes, all of which fall into four major crime categories:
  • Legal Source Tax Crimes
  • Illegal Source Financial Crimes
  • Narcotics-Related Financial Crimes
  • Counterterrorism Financing
Many of the crimes within the jurisdiction of CI have criminal and civil liabilities attached. Crimes that individuals can be charged with include (but are not limited to):
  • Tax Evasion
  • Attempt to Defeat Tax
  • Tax Evasion Avoidance/li>
  • Additional Tax Due
  • Willful Failure to Pay
  • Willful Failure to Keep Records
  • Fraudulent Statement to Employer, etc.

What Happens When the IRS Catches Offenders?

If an individual is caught cheating on their taxes, they will have to deal with the civil and criminal consequences. For more information, call us at (212) 974-3435

Friday, February 17, 2017

Restaurateurs are FURIOUS with the New York State Department of Taxation and Finance



When it comes to sales tax collections, most Restaurateurs are frustrated with the New York State Department of Taxation and Finance.

Q.) When it comes to restaurants, is the New York State Department of Taxation and Finance  unreasonable and aggressive?

A.) Yes. The New York State Department of Taxation and Finance will use all legal means (both fair and foul) to collect sales taxes from Restaurateurs.

FYI Like it or not, the New York State Department of Taxation and Finance is harder to deal with than the IRS.

In fact, New York State Enforcement Agents will come to your restaurant, demand full payment; issue ultimatums; seize property, and inflict as much pain as possible. And if you’re not careful, the New York State Department of Taxation and Finance will close you down.

Tax Preparer Sentenced To 2 Years In Prison For Fraudulent Scheme To Steal Over $1 Million From His Clients

Selig & Associates Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TOM SHIN wa...