NYC Tax Advocates

My photo
Specializing in IRS and NYS Tax Representation. Workers Compensation Audits, Payroll, Sales and Income Tax representation for Businesses, Individuals, Restaurants and Construction Companies. Civil and Criminal Workers Comp Audit representation includes: NYSIF Examinations, Premium Disputes, Employee Misclassification, Underreporting, Unreported Income, and Failure to Keep Accurate Payroll Records.

Thursday, July 27, 2017

Three Honest IRS Whistleblowers Testify. “Abuse, Impropriety and Violence” (torn from the pages of recent History)

"On This Day in History"

Three IRS Agents Testified Behind Translucent Screens and Spoke  Through Voice Alteration Machinery. 
Today, Are These Same Three IRS "Whistle-Blowers" are Afraid for Their Lives (and for the Lives of Their Loved-Ones)?

Whistle-Blower Number (1) An IRS Agent [anonymously] testified that over his long career in collections he had seen senior IRS staff and executives "violate or ignore Internal Revenue Manual procedures and Treasury regulations simply because they wanted to punish a taxpayer. I have seen more violations of IRS procedures and policies than I can count. The most appalling aspect of the foregoing examples is that in most every instance, IRS management supported the erroneous actions of the Revenue Officer”.

Whistle-Blower Number (2) A second [anonymous] IRS Agent testified that, "over my 20 years of service, I have become painfully aware of the ability of the IRS to retaliate against employees who dare to speak out. Many of the witnesses you will have before you in this heating [sic] could be retaliated against for their testimony before this Committee. At times, I have been assigned an employee case and been told that management does not like that employee, and I have been told that I need to find something that they can use to terminate their employment. In the IRS, retaliation is swift and severe. I hope you will respect the risk that these witnesses took to appear before you, and protect them from any act of revenge by IRS management”.

Whistle-Blower Number (3) A third [anonymous] IRS Agent testified that he had seen, "tax data being accessed by IRS employees to check on prospective boyfriends; tax data being accessed by IRS employees to check ex-husbands for increasing income in order to receive increased child support payments; tax data being accessed on people with whom IRS employees were having some kind of personal disagreement; tax data being accessed on individuals who are perceived as critical of the IRS, such as tax protestors or, as in one case, a person who had simply written a Letter to the Editor, and tax data being accessed on relatives and acquaintances of the subject taxpayer, such as cases where the taxpayer is suspected of using friends and relatives to hide income or assets; tax data being accessed on potential witnesses in government tax cases, and tax data being accessed on jurors sitting on government tax cases".

Are you in Trouble with the IRS?

Put the Power of SELIG & Associates On Your Side

Selig & Associates provides the most aggressive tax representation allowed by law. Specializing in Trust Fund Recovery Penalty (TFRP) representation, and all payroll, income and sales tax controversies. We settle contested tax audits; negotiate excellent payment plans, compromise tax debts, and resolve all civil and criminal tax issues, including innocent spouse relief and separation of liability. Call today for a FREE face to face Consultation (212) 974-3435. 

Friday, July 21, 2017

TRUMP & JR EWING "Don’t Get Talked into Using a Frivolous Argument"

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish legal claims to avoid paying their taxes. Time and again these arguments have been thrown out of court.
"Taxpayers should steer clear of tax-avoidance arguments and the unscrupulous promoters of such schemes," said IRS Commissioner John Koskinen. "Taxpayers tangled up in these scams end up paying back taxes and often stiff penalties as well."
In its “The Truth about Frivolous Tax Arguments” document, the IRS outlines some of the more common frivolous tax arguments. Examples include contentions that taxpayers can refuse to pay taxes on religious or moral grounds by invoking the First Amendment. The cases cited in the document demonstrate how frivolous arguments are treated by the IRS and the courts. Other examples of frivolous arguments include those that the only “employees” subject to federal income tax are employees of the federal government, and that only foreign-source income is taxable.
The “Dirty Dozen” is an annual list compiled by the IRS. It describes a variety of common scams that taxpayers may encounter. Many of these schemes peak during filing season as people prepare their returns or hire others to help with their taxes.
Perpetrators of illegal scams may be subject to significant penalties and interest as well as possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.
Don’t Get Talked into Using a Frivolous Argument
Taxpayers have the right to contest their tax liabilities in court, but they must obey the law and pay their fair share of federal taxes.
The penalty for filing a frivolous tax return is $5,000. The penalty applies to anyone who submits a purported tax return or other specified submission, if any portion of the submission is based on a position the IRS identified as frivolous in Notice 2010-33, 2010-17 I.R.B. 609, or reflects a desire to delay or impede administration of the tax laws. The list is not all inclusive and the courts may add to it at any time.
Those who promote or adopt frivolous positions also risk a variety of other penalties. For example, taxpayers can face an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, a failure to file penalty or a failure to pay penalty. Tax Courts may also impose a penalty against taxpayers who make frivolous arguments in court.   
Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Taxpayers may also be convicted of a felony for filing a false return. Those who promote frivolous arguments and those who help taxpayers to claim tax benefits based on frivolous arguments may be prosecuted for a felony.

Selig & Associates provides the most aggressive tax representation allowed by law. Specializing in Trust Fund Recovery Penalty (TFRP) representation, and all payroll, income and sales tax controversies. We settle contested tax audits; negotiate excellent payment plans, compromise tax debts, and resolve all civil and criminal tax issues, including innocent spouse relief and separation of liability. Call today for a FREE face to face Consultation (212) 974-3435. 

Thursday, July 20, 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:
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.
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.

Tuesday, July 18, 2017

Don’t Let the Insurance Company Push You Around! An editorial by David Selig, Federal Tax Practitioner at Selig & Associates

When your home or business suffers a covered loss, the Insurance Company will try to settle for “pennies on the dollar”. The Insurance Company knows that it’s nearly impossible to be objective when your property was just destroyed. It’s a traumatic experience for you and your family – but it’s business as usual for the Insurance Company. 

Houses catch fire, ships sink and water damages valuable inventory every day of the week. Insurance Companies are in business to make money and every dollar they save is quite literally, a dollar earned. Accordingly, the Insurance Company employs an army of Adjusters, Accountants and Attorneys.  And each one of these coldblooded professionals is specially trained to skin you alive. You’ve got to protect yourself, says David Selig. In the rough and tumble world of claim settlements, fair exchange is no robbery!

You’ve got to protect yourself in these difficult times, says Selig. In most cases, a Public Adjuster and Attorney will negotiate a bigger cash settlement than a policyholder ever could. For more information about settling insurance claims, contact Attorney Bradley Dorin at Selig &Associates.

Monday, July 10, 2017

IRS Late Filing & Late Payment Penalties

Eight Fun Facts on Late Filing & Late Payment Penalties
IRS Tax Tip 2013-58

  1. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline.

  1. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should  explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you.

  1. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.

  1. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

  1. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date.

  1. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent.

  1. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

  1. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time.

Friday, July 7, 2017

Tax Fraud is a Crime

14 Real Examples of Tax Fraud
(1) Underreporting income and lying about how much you earn.  
(2) Pocketing cash to avoid paying tax. 
(3) Inflating business expenses, e.g. paying household expenses and other bills through the business. 
(4) Making up phony-baloney business expenses. 
(5) Using fake social security numbers.
(6) Cooking the Books, viz. keeping two sets of books. 
(7) Claiming exemptions for you’re not entitled to, viz. fake husbands, wives, children and dependents.   
(8) Concealing your crimes by destroying computers, books and documents. (9) Doctoring up checks, receipts and records, e.g. overstating expenses, understating or misclassifying income. 
(10) Hiding financial information from the IRS. 
(11) Transferring assets away from the IRS. 
(12) Creating or inflating charitable deductions. 
(13) Failure to file tax returns. 
(14) Lying to the IRS, e.g. deliberately making false statements while under oath. 
If you’d like more information about tax fraud, call Selig & Associates directly
"Just the Facts"

Are you attempting to evade or defeat paying taxes? Upon conviction, the taxpayer is guilty of a felony and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 5 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution (26 USC 7201).

Fraud and false statements Upon conviction, the taxpayer is guilty of a felony and is subject to (1) imprisonment for no more than 3 years, (2) a fine of not more than $250,000 for individuals or $500,000 for corporations, or (3) both penalties, plus the cost of prosecution (26 USC 7206(1)).

Willful failure to file a return, supply information, or pay tax at the time or times required by law This includes the failure to pay estimated tax or a final tax, and the failure to make a return, keep records, or supply information. Upon conviction, the taxpayer is guilty of a misdemeanor and is subject to other penalties allowed by law, in addition to (1) imprisonment for no more than 1 year, (2) a fine of not more than $100,000 for individuals or $200,000 for corporations, or (3) both penalties, plus the cost of prosecution (26 USC 7203)

The Sovereign Citizen Movement (is coming back like a bad penny)

Individuals and groups who identify with the Sovereign Citizen Movement claim that the Federal Government is operating outside its jurisdict...