Income Tax Problems
Masullo has been helping with IRS problems and state income tax problems for
3
decades. He possesses the education, skill, and experience to competently handle
virtually any tax problem, including the following:
Appeals
Taxpayers have broad appeal rights within IRS. You can
appeal almost anything, even IRS collection decisions. The key is to act quickly
because you generally only have 30 days to file your appeal. So call
me right away if you need help with an IRS, NY State, or NY City tax
appeal.
Because appeals officers are IRS employees there is an
inherent bias in favor of their employer. However, the appeal officers are duty
bound to give you as impartial a hearing as possible. It is the policy of IRS to
give their best settlement offer at the appeal stage. Thus, the appeal process
offers an excellent opportunity to settle your case without the need to go to
court. In my experience, I have found appeals officers to be fair and
reasonable. They seem to bend over backwards to encourage settlement of tax
cases. So unless you have a frivolous case or an abrasive personality, you can
usually get a fair hearing with an IRS appeals officer.
I also like the appeal process because the appeals officer will generally view
evidence that may not be admissible in court. But the appeals process is not
without disadvantages. For it is possible (although not likely) for an
appeals officer to bring up new matters that were not previously raised by the
original revenue agent. Nonetheless, I recommend the appeals process as a less
costly alternative to tax court.
Audits IRS audits are not as common as they used to be. I
estimate the 1 person in 100 who is subjected to an
IRS audit is
either very unlucky or they somehow asked for trouble. The main reason audits
are so rare is political, for it would be impossible to get elected if you voted
to increase the IRS budget. Instead, the political trends continue toward
"IRS Bashing" and increased taxpayer rights.
While
I have done my share of IRS bashing in the past, I now have a different view.
Now don't get me wrong - I still think the Collection Division can be very
arbitrary and unfair. I suppose occasional injustices are inherent in an
organization as vast and powerful as IRS. But I have practiced in other areas of
the law and I know of no other forum where the rights of the accused are given
so many safeguards and protections. It is difficult to predict the outcome of
any audit in advance. However, the one thing I can always guarantee is that,
eventually, you will get a fair hearing at IRS. So now I don't bash IRS anymore,
but I continue to lambaste our political leaders for the sad state of our tax
system.
Another reason
your tax return is less likely to be the subject of an audit is because IRS has
so many other priorities. First, there is the offshore economy that needs
serious police work. Next come the high income-high risk taxpayers. In a sense,
many high income taxpayers are audited simply because they have deep pockets. In
other words, there is a higher return on investment auditing wealthy taxpayers
compared to taxpayers below the poverty line. After that IRS has to deal with a myriad
of "abusive tax shelters" and their promoters. Then come your more
traditional tax abusers who simply "forget" to file their returns. And
then there are those in the vast underground economy who forget to report all
their income. With all these tax cheats at the front of the line it is no
surprise that audits of everyday taxpayers have become so rare.
Because
of the low odds of getting audited many taxpayers have elected to play the
"audit lottery." There are even a few accountants and lawyers who
believe anything is legal if you don't get caught. Obviously, I could never give
this type of bad advice. Instead, I view my role as keeping my clients out of
trouble. If or when you do get into a tax jam it is my job to do my utmost to
get you out of it and to help cut your losses.
I
am often asked what causes a return to be audited. As I stated above, these days
you almost have to ask for an audit. While IRS keeps it's audit selection
process a top secret, I just use the "smell test." If something
looks or smells funny on the face of a return it is a likely candidate for an
audit. In my experience, most audits are initiated to check up on large losses,
large or unusual deductions, unexplained entries on the return, or some other extraordinary
transaction. In some cases, an audit may be prevented by fully documenting
these large or unusual items and by double checking your return for
completeness.
I am
constantly warning clients and taxpayers not to become complacent and not to
play the "audit lottery." There is a good chance the pendulum will
swing in the other direction as the administration struggles to find ways to
finance massive budget deficits. Our leaders have already painted themselves
into a corner by promising not to raise taxes. So what choices will the
politicians make when they discover all the holes in the system?
My
guess is they will opt for measures to instill fear into the taxpaying public in
order to enhance our system of "voluntary compliance." One way of
doing this is to increase penalties for those who get caught. Tax crimes and
offenses are already subject to harsh punishment. I have heard of many cases
where tax cheats were hit with larger fines than corporate criminals. (Note that
this never happened to any of my clients. None of my clients have ever been
convicted of any tax crimes). And I have read many cases where those convicted
of tax fraud received more jail time than those convicted of violent crimes such
as rape and manslaughter. That shows where our priorities are in our system of
injustice. In any event, I predict more of the same. Congress will enact new
penalties and even more harsh punishments for tax underpayments.
To
increase this sense of fear in the eyes of the average taxpayer, IRS will
increase audits of high profile cases. Martha Stewart - I feel sorry for you.
After the SEC gets through with her who do you think will be next on line? IRS,
of course. I certainly wouldn't want to be one of those "fallen"
corporate executives in this political climate. For it soon will become
fashionable to audit these types, and to use them as sorry examples for the rest
of us ordinary taxpayers.
So
do you have to worry about a tax audit? Probably not, if you are an average
taxpayer. Probably yes, if you are a celebrity or if you are very wealthy. If
you should become involved in a tax controversy or if
you need help with a tax audit or tax problem you can reach me at 212 243 1056
or by email at Masullo@catskill.net.
Martha Stewart - I shall be waiting for your call.
Back
Taxes
Internal Revenue Service usually doesn't go back beyond 10 years. However, there are
cases where the IRS can go back as far as they want.
This might occur when the IRS proves tax fraud or when a taxpayer has been out
of the country. In fact, I recently prepared 1985 and 1986 returns for a client
who was working in Mexico during the nineties.
Surprisingly, many delinquent clients are entitled to refunds from IRS. Unfortunately, if
IRS owes you a refund you can only go back 3 years.
If you haven't filed in a while, don't worry, we've seen it all before
and we can help you come clean and possibly work out a deal with IRS.
Levies
and Tax Liens
These are usually the most difficult and heartbreaking types of jobs we are
asked to handle. Although taxpayers have been granted substantial new appeal
rights with regard to many IRS collection actions, you must file your appeal
within 30 days. Thus, it is imperative that you contact
us the moment you receive a notice of lien, or any other communication from
the IRS Collection Department.
Offer
in Compromise
The IRS has been mandated to liberalize the Offer in Compromise Program. This
program is for taxpayers who simply cannot afford to pay all their taxes,
or for some other valid reason, want to settle their tax bills for less than the full
amount. There are conditions attached and the paperwork can be massive, but if you can't pay all
your taxes an Offer in Compromise should be
considered.
Refund Claims Normally you have to file a claim to get a tax refund from IRS. If you made a mistake on a prior year's forms, we can file amended returns to
claim your refunds.
Tax Court We usually settle our cases before
they go to the US Tax Court because of the costs and hazards of litigation.
However, sometimes you have no choice. Masullo has been admitted to practice before
the US Tax Court since 1990.
