Creator of Beanie Babies Hit with $53.5 Million Penalty for Tax Evasion

Posted on 02/12/2014 by Sandy Suchoff

tax evasion

Ty Warner, the creator of Beanie Babies, has been charged with tax evasion for failing to report income in a secret offshore bank account. The 69-year-old Chicago-area billionaire has agreed to plead guilty and pay a $53.6 million civil penalty for withholding investment earnings from a Swiss bank account.

Warner was charged Wednesday morning in U.S. District Court but his arraignment date has not been set yet, according to a court statement. Warner is the sole owner of TY Inc., a Westmont based company that designs and sells plush toy animals including the popular Beanie Babies.

Prosecutors allege that Warner held a secret offshore account with Union Bank of Switzerland, dating back to 1996 and in 2002 transferred the assets to a second Swiss financial institution, which held more than $93 million. That same year, Warner allegedly failed to report more than $3.1 million in investment income to his accountants and the IRS. Instead, he reported only $49.1 million in income.

Warner is the second U.S. taxpayer charged in Chicago’s federal court in connection with an ongoing investigation of U.S. taxpayer clients of UBS and other overseas banks that hid foreign accounts from the IRS, prosecutors said.

In early 2009, UBS entered into an agreement with the United States, allowing company officials to defer prosecution by admitting that bank officials helped U.S. taxpayers hide accounts and funds from the IRS. As part of the agreement, UBS provided the identities and account information of certain U.S. customers, prosecutors said.

“Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report. The charge alleges that Warner went to great lengths to hide from his accountants and the IRS more than $3.1 million in foreign income generated in a secret Swiss account,” said Gary S. Shapiro, United States Attorney for the Northern District of Illinois.

According to Forbes magazine, Warner’s net worth is estimated at $2.6 billion, making him the 209th wealthiest American and 589th wealthiest person in the world.

“This is an unfortunate situation that Mr. Warner has been trying to resolve for several years now,” Warner’s attorney Gregory Scandaglia said in a statement released by his law firm. “Mr. Warner accepts full responsibility for his actions with this plea agreement.”

If convicted, Warner could face a maximum sentence of five years in prison and a $250,000 fine. In addition, he could also be found liable for all back taxes with interest.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

 

 

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IRS Sends “Possible Income Underreporting” Notices

Posted on 01/23/2014 by Sandy Suchoff

tax bill 3

 

Form 1099-K is a new information return sent to businesses by “payment settlement entities” reporting the amount of credit card and other electronic receipts that were processed for the business. The IRS also receives a copy of Form 1099-K and cross checks the reported amounts with the business’s total income reported on its tax return. Where the numbers don’t seem to make sense, the IRS sends notices to businesses telling them they “may have underreported gross receipts.” Notices go on to say “This is based on your tax return and Form(s) 1099-K, Payment/Merchant Cards and Third Party Network Transactions that show an unusually high portion of receipts from card payments.”

The IRS has sent thousands of letters labeled “Notification of Possible Income Underreporting” to small business owners. The notification project is ongoing as part of the IRS’s campaign to deal with the “tax gap,” the difference between taxes owed and taxes actually collected.

If you receive a notice, contact us immediately so that we can determine what response is required.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com

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IRS Systems Faulted for Identity and Access Management Security

Posted on 12/12/2013 by Sandy Suchoff

Tax-ID-Theft 2

Taxpayer data is vulnerable to inappropriate use, modification or disclosure, perhaps without being detected, according to a new government report that found problems with the Internal Revenue Service’s technology for configuration management and identity and access management.

The report, from the Treasury Inspector General for Tax Administration, reviewed the IRS’s compliance with the Federal Information Security Management Act, of FISMA, and found the agency to be compliant in most areas.

However, it cautioned that until the IRS takes steps to fully implement all 11 security program areas covered by FISMA, taxpayer data will remain vulnerable.

Under the FISMA legislation, the Offices of Inspectors General are required to perform an annual independent evaluation of each federal agency’s information security programs and practices. The report by TIGTA presents the results of its FISMA evaluation of the IRS’s information security program for fiscal year 2013.

Based on the evaluation, TIGTA found that nine out of 11 security program areas were generally compliant with the FISMA requirements. In addition, six of the nine security program areas included all of the program attributes specified by the Department of Homeland Security’s fiscal year 2013 Inspector General Federal Information Security Management Act Reporting Metrics, including continuous monitoring management, risk management, a plan of action and milestones, contingency planning, contractor systems and security capital planning.

Three of the nine security program areas, while generally compliant, were not fully effective due to one program attribute that was missing or not working as intended. These areas were incident response and reporting, security training, and remote access management.

However, two of the 11 security program areas were not compliant with FISMA requirements and did not meet the level of performance specified by the DHS’s FY 2013 Inspector General Federal Information Security Management Act Reporting Metrics due to the majority of the DHS-specified attributes being missing or not working as intended. These were in the areas of configuration management and identity and access management.

TIGTA did not include recommendations in the report, and no response from the IRS was included either.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

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IRS Expands Fast-Track Settlement Program for Small Businesses Under Audit

Posted on 11/29/2013 by Sandy Suchoff

Tax Audit 3

The Internal Revenue Service expanded nationwide the roll-out of its streamlined Fast Track Settlement program, which aims to help small businesses under audit settle their differences with the IRS over their tax debts more quickly.

The Fast Track Settlement program is designed to help small businesses and self-employed individuals who are under examination by the Small Business/Self Employed Division of the IRS. Modeled after a similar program that has long been available to large and midsize businesses with more than $10 million in assets, the FTS program uses alternative dispute resolution techniques to help taxpayers save time and avoid a formal administrative appeal or lengthy litigation. As a result, audit issues can usually be resolved within 60 days, rather than months or years, according to the IRS.

In addition, taxpayers who choose the FTS option lose none of their rights because they still have the right to appeal even if the FTS process is unsuccessful.

Jointly administered by Small Business/Self-Employed Division and the IRS Appeals office, FTS is designed to expedite case resolution. Under FTS, taxpayers under examination with issues in dispute work directly with IRS representatives from SB/SE’s Examination Division and Appeals to resolve those issues, with the Appeals representative typically serving as mediator.

The taxpayer or the IRS examination representative may initiate Fast Track for eligible cases, usually before a 30-day letter is issued. The goal is to complete cases within 60 days of acceptance of the application in Appeals.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

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Did You Receive a CP2000 Notice from the IRS?

Posted on 11/26/2013 by Sandy Suchoff

irs notice 3

Have you received a CP 2000 notice? Notice CP 2000 shows proposed changes to your income tax return. This proposal is based on a comparison of the income, payments, credits, and deductions reported on your tax return with information on these items reported to us by employers, banks, businesses, and other payers.

The CP 2000 also reflects any corrections we made to your original return when we processed it. If you receive a notice from the IRS using form CP2000 saying you owe additional tax, there is a good chance the interest calculation on the notice is incorrect. Unfortunately, the amount stated in the incorrect notices is too low. You will owe more.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

 

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The IRS is Having a Bad Year

Posted on 09/23/2013 by Sandy Suchoff

 

mistake

First it was the acknowledgement of mishandling non-profit applications for groups with “Tea Party” and “Patriot” in their name. Then it was the bad publicity around lavish spending at IRS internal conventions and meetings. The latest oops is the admission that notices sent out to taxpayers in July miscalculated the amount of interest owed.

If you have had similar issues or problems with the IRS, , we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

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If You Receive an IRS Notice, Here’s What to Do

Posted on 09/09/2013 by Sandy Suchoff

irs notice 2

Each year the IRS sends millions of letters and notices to taxpayers. Although some people may feel anxious when they receive one, many are easy to resolve. Here’s what to do if you receive a letter or notice from the IRS:

1. Don’t panic. Follow the instructions in the letter.

2. There are many reasons the IRS sends notices to taxpayers. The notice usually covers a specific issue about your account or tax return. It may request payment of taxes, notify you of a change to your account or ask for additional information.

3. If you receive a notice about a correction to your tax return, you should review it carefully. You usually will need to compare the information in the notice to the entries on your tax return.

  • If you agree with the correction, you usually don’t need to reply unless a payment is due.
  • If you don’t agree with the correction the IRS made, it’s important that you respond as requested. Respond to the IRS in writing to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left corner of the notice. Allow at least 30 days for a response from the IRS.  If you feel that you cannot accomplish this on your own, call  or email us to set up a consultation to discuss how e can be of assistance.

4. Keep copies of any correspondence with your tax records.

Often our clients don’t understand the correspondence or disagree with the notice from the IRS.  We can help!

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

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IRS Identity Verification Requests

Posted on 08/09/2013 by Sandy Suchoff

irs building 3

In recent years, the IRS has stressed its commitment to protecting taxpayers from tax-related identity theft. As part of this commitment, the IRS enhanced the Electronic Fraud Detection System (EFDS).

In 2012, the EFDS detected 7.8 million potentially fraudulent returns. When the system flags a tax return, the IRS does not process the return and freezes any refunds until the taxpayer verifies his or her identity.

When a return is flagged, the IRS sends Letter 5071C or Letter 4883C to affected taxpayers to request additional information to continue processing the tax return. The taxpayer is instructed to:

  1. Obtain a copy of the past two years’ tax returns to provide specific information to the IRS.
  2. Call the Taxpayer Protection Line (TPL) at (800) 834-5084 or visit idverify.irs.gov.

The IRS representative and the website questionnaire will request specific information about the taxpayer’s return, such as filing status, dependent information, employer information, adjusted gross income and other personal and financial information that will help the IRS confirm the taxpayer’s identity.

Some taxpayers have had limited success with using the website questionnaire, and have resorted to calling the TPL.

After the taxpayer has verified his or her identity with the IRS, the IRS should process the return and send any refund due within four to six weeks. However, many taxpayers are not receiving their refunds within that time-frame.

Most of the taxpayers affected by this new initiative prepared and filed their own returns and were expecting refunds. Many affected taxpayers contacted a tax professional for help with this issue for several reasons, such as:

  • Concern that the identity verification letter could be a scam
  • Confusion about the letter’s purpose
  • Uncertainty about their ability to accurately self-prepare tax returns
  • Fear that they have a larger IRS compliance issue

Should you find yourself in such a situation, please call us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

For help with IRS, tax audit, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, and IRS levy, an IRS tax Lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.  

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Follow the Tax Rules When You Borrow From Your Corporation

Posted on 07/29/2013 by Sandy Suchoff

loan

If you’re a business owner and your company lends you money, you’ll enter it in the books as a shareholder loan. However, if your return is audited, the IRS will scrutinize the loan to see whether it is really disguised wages or a dividend, taxable to you as income. Knowing what the IRS might look at may be useful when you structure the arrangement.

First, the IRS will look at your relationship to the company. If you’re the sole shareholder with full control over earnings, that may weaken your case that the loan is genuine. On the other hand, if you’re one of several shareholders and none of the others received similar payments, that suggests it might be a genuine loan.

Next, the IRS will look at the details of the loan. Did you sign a formal promissory note? Did you pledge any security against the loan? Does the loan have a specific maturity date, or is there a repayment schedule? What rate of interest are you paying? Have you missed any payments, and if so, has the company tried to collect them? The more businesslike the terms of the loan, the more it will appear to be a genuine debt.

Finally, the IRS will consider other factors. Is your company paying you a salary that’s in line with the work you perform? Has the company paid dividends, or is this the only payment to its shareholder? Is the size of the loan within your ability to repay? How does the size of the loan compare to the company’s profits?

Whether the IRS will try to tax you on the “loan” will depend on all these factors. If you’ve paid attention to the details, the loan should withstand IRS scrutiny. Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com,  if you’d like more information about borrowing money from your closely held corporation.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  We are available  at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

 

 

 

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What Are Your Audit Odds?

Posted on 07/16/2013 by Sandy Suchoff

Audit Help

Do you wonder what your odds are of being selected for an IRS audit?

Statistics just released for tax returns filed in 2011 and audited in 2012 show a 1% audit rate for individual tax returns. About 3.6% of business returns with income under $200,000 were audited; returns with income over $200,000 were audited at a 3.4% rate. Large corporations had a 17.8% audit rate, while small corporations had a 1.1% rate.

Our practice has years of experience defending taxpayers in their audits. Each case is handled individually, and analytically reviewed and prepared for by an experienced CPA. Our expertise is a result of or years of experience defending our clients against the IRS.

For help with IRS, tax audits, tax problems, back taxes, tax settlements, tax debt, Offer in Compromise, tax help, IRS debt, a tax lien, a state tax levy, an IRS levy, an IRS tax lien, contact us.  If you need IRS help and have unresolved cases with previous tax lawyers and tax attorneys, we can help find an optimal resolution for your indigenous needs.  Contact us at 201-947-8081 or 646-688-2807, or email us at info@irstaxproblems.com.

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