Posted on June 16, 2016 in Taxation Law

On April 4, 2016, at the National Low Income Housing Coalition Policy Forum, the United States Secretary of Housing and Urban Development Julián Castro announced, "HUD will use the full force of the law to protect the fair housing rights of folks who've been arrested or who're returning to their communities after serving time in jail or prison."

Roughly 100 million adults in the United States have a criminal record. That is about a third of the population and Castro identifies Black and Latinos being arrested at disproportionately higher levels as unfair. He cites statistics that while drug use is consistent across the population, brown and black people are more likely to be arrested for drug violations. This is a new interpretation of real estate law.

Castro believes many landlords instantly and without thought refuse to rent to criminals and those with an arrest record, no matter how long ago the conviction, and disproportionately affecting millions of people of color without good cause. The Federal government seeks to end this practice.

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 Posted on June 09, 2016 in Taxation Law

If you're considering estate planning/ wills & trusts, you may want to consider the different types of trusts available for estate planning purposes. There are constructive trusts, charitable trusts, asset protection trusts and revocable and irrevocable trusts. Your financial situation, along with a host of other circumstances, will dictate the best trust for you.

Irrevocable and Revocable Trust

A revocable trust is a trust that can be nullified or altered during the course of the trust maker's life. This trust is established to allow the trust maker to add property title to the trust and naming himself as the trustee. The trust maker can remove the property from the trust whenever he chooses.

An irrovocable trust is one that can't be nullified or changed after the trust is established. Also, the trust maker must appoint someone as trustee.

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 Posted on June 01, 2016 in Taxation Law

The IRS has implemented a new policy relating to the means its agents must use to initiate contact with taxpayers. Effective immediately, when an IRS agent contacts you for the first time, that contact must be via a mailed notice.

Although a follow-up contact may be made by telephone (but not any sooner than 14 days after the initial letter is sent), it is required that any taxpayer selected for an examination (also known as an audit) be notified of this fact via mailed letter.

This action has been taken by the IRS, at least in part, due to the proliferation of telephone scams wherein scammers pretending to be IRS agents contact unsuspecting taxpayers and attempt to obtain personal information, financial information, and even payments.

If you receive a telephone call from someone claiming to be an IRS agent, and you have not received a written communication from them before this, you should not provide them with any personal information. Instead, you should contact the IRS directly and inquire as to whether they are attempting to contact you, and if not, report the scammers.

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 Posted on May 27, 2016 in Property Taxes

As the foreclosure bubble wheezes out its last bit of hot air, the courts and tax collectors are no longer borrower friendly or sympathetic in regards to hardships and distressed markets. The dockets are backlogged and the various tax administrations are seeking relief for the debts owed and collateralized by real property.

Asset managers will advise borrowers to work with their attorneys and attempt to mitigate the loss as much as possible. Alternative methods include escrow analysis, loan modifications, repayment agreements, Short Sales, and the Deed in Lieu.

In cases of default each circumstance warrants individual review. If the loan has only been deemed as " nonperforming " for a short time, an escrow analysis should be conducted to evaluate any surplus or shortage being held for the payment of taxes and/or insurance. These funds can be recalculated or reapplied when restructuring the loan. A loan modification or repayment agreement is ideal for this type of defaulted borrower. Being proactive about the situation and working diligently to become current on the payments goes a long way with your lender, while sheltering you from litigation and credit risk.

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 Posted on May 20, 2016 in Property Taxes

Sometimes people balk at paying lawyers to do what they think they can do for themselves. What could be simpler than a will, if you are just leaving everything to your family? All you have to do is name an executor. Two or three sentences, one page, and you are done . Right? Maybe not.

Ethel Hinz died in 1992 with an estate of over $10 million. She left a handwritten will. Her estate still has not been settled after 24 years.

The will was only a few sentences. Ethel named her son executor, describing him as her "sole heir," and saying she trusted he would "subscribe to my wishes, along lines that were discussed previously and privately in the past." Ethel wrote the will just a few days after her daughter had died, survived by two granddaughters, who would of course also be "heirs" if Ethel had not written a will.

Possibly the "subscribe to my wishes" language was meant to create a trust for the granddaughters, with their uncle, the decedent's son , as trustee. If so, the terms of that trust are unknown, and would not be enforceable by a court.

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 Posted on May 12, 2016 in Small Business Taxes

If you have a business-whether it's a single-member outfit you run out of your garage or a large organization with dozens or even hundreds of employees-you will eventually come to the question of whether you should form a business entity such as a corporation or LLC.

Doing business as a corporation or LLC makes sense for many reasons, not the least of which is the liability limitation that protects you as an individual from having to pay for any issues that arise out of the operation of the business. Still, when it's time to create a business entity, you will need to consider the various tax implications of each.

You should speak with an experienced attorney who knows tax law in order to fully understand the different types of tax exposure each entity can bring with it. For example, although operating as a corporation will protect you from being sued personally for the negligent acts of the corporation, doing so can expose you to double taxation: the profits of the corporation are taxed at the corporate rate, and then whatever pay you take out of the business is taxed at your personal income tax rate. On the other hand, if you operate the business as an LLC , the income of the business passes through to you and is only taxed once-at your personal income tax rate, which is typically far lower than the corporate income tax rate.

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 Posted on May 05, 2016 in Tax Appeals

If the IRS has surprised you with a significant tax bill, and if either your true liability for the tax or your ability to pay it are in question, you may be able to make an offer in compromise.

An offer in compromise is essentially what it sounds like: you make the IRS an offer to pay an amount (presumably, less than the full amount) in compromise. You agree that you will pay the agreed-upon amount instead of continuing to fight the matter, and the IRS in turn agrees to accept the amount rather than pushing for you to pay the debt in full.

When you inform the IRS of your intent to utilize the offer in compromise process, the IRS will typically halt collection activity on your account in order to provide you with the time to gather supporting documents and assemble your offer. After you turn in your offer, the IRS will evaluate it, and will either accept it, reject it outright, or make a counter-offer.

An offer in compromise can be a very fact-driven proceeding, with the IRS either accepting or rejecting it depending on what information you have provided, so be sure to consult an attorney who specializes in tax law. Doing so will often be the difference between an offer that is rejected and one that is accepted .

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 Posted on April 29, 2016 in Tax Audits

Four words that strike fear into the hearts of individuals and businesses alike are: "You are being audited." The thought of an audit raises images of being grilled by the auditor like a witness being cross-examined.

However, an audit doesn't have to be like that, and if you are prepared for it, you can help ensure that the process is completed with a minimum amount of time and trouble. Here are some tips to assist you in the event that the IRS or a state revenue agency selects you for an audit.

1. Keep good records.

Many people-and even many small businesses-tend to get so caught up in the hustle and bustle of everyday life that they neglect to maintain solid records showing legitimate business expenses. The idea of managing and filing mountains of receipts, invoices, and other similar documents can be daunting, but if you start today and keep on top of this regularly you can avoid the hassle of going through shoeboxes of receipts trying to show the auditor what is-and is not-relevant to your bottom line .

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 Posted on April 22, 2016 in Taxation Law

As part of a trillion-dollar spending package enacted in the eleventh hour last December, averting yet another threatened government shutdown, the Congress made permanent dozens of expired or expiring tax incentives.

Among these was the so-called charitable IRA "rollover."

First enacted in 2006 as a temporary measure, this incentive had been repeatedly allowed to expire and then extended retroactively, impairing its effectiveness as a fundraising tool for charities. It is now a permanent feature of the tax Code.

The charitable IRA "rollover" allows a taxpayer aged 70-1/2 or older to direct up to $100k per year from individual retirement accounts to public charities, without taking these distributions into income.

These distributions do not count against the limitation on the deductibility of charitable contributions, 50 percent limitation of adjusted gross income, but they do count toward your minimum required IRA distribution.

The strategy is especially attractive where the minimum required distribution would otherwise push you over the threshold at which the "Pease" limitation on itemized deductions takes hold - $259,400 for a single taxpayer in 2016, or $311,300 for a married couple filing jointly - or the 3.8 percent surtax on net investment income - $200,000 single, $250,000 joint.

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 Posted on April 15, 2016 in IRS Scams

Prepaid debit cards already have enough controversy surrounding them, and this latest bit of news about tax refunds being frozen for prepaid debit card users isn't going to do any favors for the industry.

Several news outlets, including ABC News, are reporting that the reason for this "funds freeze" is because the IRS is teaming up with the financial industry to crack down on tax fraud.

The problem is, of course, is that this is affecting the nation's poorest Americans...and they are finding that they have very little recourse.

But according to the IRS, though this is an inconvenience for these Americans, it's an absolute necessity in order to stave off the growing tax fraud scam that people are doing, using prepaid cards to collect the tax refunds of unsuspecting victims.

In 2012, according to the IRS, there was a Miami man who was sentenced to five years in prison, and an additional three years of probation, for filing over 500 fraudulent tax returns. This man also used prepaid debit cards to collect the money, and this includes using such companies as GreenDot and WalMart Money Cards. Finally, this man also used gift cards to receive the refunds, which totaled over $30,000.

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