John D. Teter Law Offices



1361 South Winchester Boulevard, Suite 113
San Jose, CA 95128

Recent Blog Posts

IRS Launches Voluntary Tax Preparer Program

 Posted on June 02, 2014 in Taxation Law

The Internal Revenue Service recently announced that it will launch a new quality certification program for tax preparers.

The agency recently released new procedures that clearly describe details about the new education program. The Annual Filing Season Program, as it is called, is already a controversial one. The launch of the program came soon after the agency lost several court decisions, over its authority to impose mandated tax preparation programs.

For instance, the American Institute of CPAs has been in the forefront of criticizing the federal agency's plans for launching a tax preparer certification. The American Institute of CPAs says that such a program could even be unlawful. Several other groups have also raised their own objections to the program.

As part of the plan, while there will be no such formal certification exam like the one that exists for the now-invalidated Registered Tax Return Preparer or RTRP program, preparers would be required to take an annual refresher course. The program would be administered by a continuing education provider approved by the Internal Revenue Service. The refresher course would be designed according to the guidelines provided by the IRS, and would have to last for six hours. The program would also include a test of the course material. This would involve include a minimum of 100 questions, and applicants who complete the refresher course successfully would be required to provide right answers to at least 70% of the questions. Those who complete all formalities would receive a Record of Completion by the Federal Agency.

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IRS to Take a Closer Look at Alimony Payments

 Posted on May 04, 2014 in IRS Scams

If you are currently receiving or paying alimony, the Internal Revenue Service has its sights on you. According to the Internal Revenue Service, it will soon begin devoting more time and focus to tax claims related to alimony.

Typically, tax laws require that spousal maintenance payments that are made by one spouse to the other be claimed as deductibles by the payer. The amount is also taxable for the recipient. Basically, the person who is paying the alimony can claim it as a deductible, while the person receiving the alimony must declare it as income on tax papers. However, the Internal Revenue Service does not believe that Americans are being totally honest about the alimony that they are receiving. It believes that there is a wide discrepancy between alimony deductibles and the alimony that is claimed as income.

Earlier this year, the Treasury Inspector General for Tax Administration released a report in which it identified that there was a very large gap between deductions for alimony by people making the payments, and the income claimed on returns. The report focused on about 570,000 income tax returns in tax year 2010. It found that the deductions for alimony paid exceeded the income from alimony by more than $2.3 million. Overall, the report found that 47% of the tax returns that were analyzed had some discrepancy between the payments.

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Many Doctors Report Tax Fraud

 Posted on April 01, 2014 in Tax Audits

According to news reports, many physicians who waited till April 13 to file taxes may have become victims of tax fraud.

Many doctors have reported being surprised when they attempted to file the taxes on April 15, and found out that their taxes had already been filed. Filing fraud taxes on behalf of another person is a simple tax fraud scheme that is fairly common. In these schemes, the person then pockets the refunds that the victim was eligible for.

This scheme is fairly simple to operate. The fraudster will access a company's W-2 database, which provides all the data about employees of the firm, their earnings, as well as personal data. With all that information, a person can find it very easy to file returns on behalf of the employee. In fact, some fraud schemes use fraud software that actually automates fraudulent and tax return filing. Some payroll systems are much more vulnerable to hacking than other types of systems.

Several medical societies have reported recently that a large proportion of their doctors have reported identity fraud, and tax fraud. In fact, one statement by the American Medical Association finds that fraudsters have hit doctors and healthcare providers this year. It's not yet clear whether the fraudsters were trying to attract doctors specifically, or whether they were trying to target high-income professionals.

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Lookout for Scams This Tax Season

 Posted on March 03, 2014 in IRS Scams

We're in the 2014 tax season, and as with every year, this year too, it's important for taxpayers to look out for some of the most common scams out there. The Internal Revenue Service, as it does every year, is warning taxpayers once again to be careful and lookout for tax-related scams that are very often perpetrated using the IRS name.

There are several tax-related scams out there, and these usually emerge in tax season. From e-mail refund schemes that pose as the IRS, to telephone calls from IRS impersonators, taxpayers this year are likely to be targeted through a number of such frauds.

One of the most important things to know to avoid a tax-related scam is that the Internal Revenue Service, a federal agency, does not contact taxpayers by e-mail, and ask them for personal or financial data. If you receive any kind of electronic message, which includes e-mails, text messages, or any private message on your Facebook or Twitter accounts, you can rest assured that this is not the Internal Revenue Service contacting you. Besides, when the Internal Revenue Service contacts you, it does not ask you for personal financial information like your passwords, your personal identification number, and access information for your credit cards and bank account.

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Updated IRS Smart Phone App Helps You Track Refunds

 Posted on February 02, 2014 in Taxation Law

Smartphone users, who have downloaded the Internal Revenue Service's tax help app, now have an update that promises to enhance user experience, and make it easier for taxpayers to monitor key features.

The Internal Revenue Service recently announced the update to its IRS2Go Mobile app, which comes just in time for the tax season. New features that are included with the new update include a feature that allows taxpayers to track the status of his or her tax refund. The feature is easy to use, and any smart phone user will find the status tracker very useful, because it allows him to follow the tax return through the entire process. That makes it very convenient, especially because you may need the funds, and it helps to have a tracker that allows you to know exactly when you can expect that refund in your bank account.

According to the Internal Revenue Service Commissioner, the new update to the IRS2Go mobile app gives taxpayers more features that allow them to get the information that they need quickly, conveniently and around the clock. The smart phone app was introduced during the 2011 tax season, and has been downloaded at least 3.5 million times. The app is available for download on the iPhone and iPod Touch, as well as on Android devices.

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National Taxpayer Advocate Calls for Bill of Rights

 Posted on January 03, 2014 in Taxation Law

National Taxpayer Advocate Nina E Olson has released her annual report to Congress for 2013. In the report, Olson calls for the Internal Revenue Service to establish and implement a Taxpayer Bill of Rights.

According to the Report, a Bill of Rights like this would help establish In General Revenue Service goals, and performance measures, and help provide guidance for federal employees when they deal with taxpayers. More importantly, the Bill of Rights would provide information to American taxpayers that will help them while dealing with an Internal Revenue Service employee. Currently, most taxpayer rights are contained in the Internal Revenue Code, but these are not compiled in a comprehensive and coherent manner, and therefore, California tax lawyers find that most American taxpayers remain unaware of their rights.

This is not the first time that Olson has recommended such guidelines. Earlier too, she had called for the adoption of a Taxpayer Bill Of Rights, because when taxpayers are treated better, rather than being treated in an arbitrary manner, they learn to trust the system, and also become more likely to comply with tax laws.

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GRAT Allows Wealthy Americans to Avoid Estate Tax

 Posted on December 26, 2013 in Taxation Law

A trust that is specifically designed to take advantage of a federal tax loophole created in 1990, is helping many billionaire families avoid paying taxes, and in a perfectly legal manner. The trust is called the Grantor Retained Annuity Trust, or GRAT, and it is helping many wealthy billionaires to avoid paying taxes legally. In fact, according to a recent piece that was published in Bloomberg Politics, some of the richest Americans have been able to avoid taxes to the tune of $100 billion merely using GRAT.

How it works is like this. Under the current tax laws, individuals and couples who are worth more than $ 5.25 million, and individuals and couples who are worth more than $10.5 million, will have the federal estate tax applied to them. However, when it comes to inheritance, the value of the estates above these exemptions are liable to be taxed a gift tax at the rate of 40%. If families want to pass on their assets to their children during their lifetimes, they are only allowed to give a maximum of $ 28,000 a year to one person without having the gift tax levied on them.

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IRS Warns about Telephone Tax Scam

 Posted on November 02, 2013 in IRS Scams

The Internal Revenue Service is warning about a sophisticated telephone tax scam that is being reported from around the country. The scammer is specifically targeting taxpayers, especially persons who have recently immigrated into the country. Under the scam, people are being informed that they owe money to the Internal Revenue Service, and that the money must be paid promptly via a wire transfer or a preloaded debit card. If the taxpayer refuses to pay, then the caller threatens the person with arrest, deportation or suspension of his license.According to the Internal Revenue Service, taxpayers around the country must be warned about the scam, because these persons are currently operating in all corners of the country. These incidences are being reported from all states, and the Internal Revenue Service wants to inform all taxpayers that it has not designated any persons to make such calls. If you receive a call from someone who claims to represent the Internal Revenue Service, you must know that any person who represents the federal tax agency will never ask you for your credit card number over the phone. He will also never ask you for a prepaid debit card or wire transfer of money. Any such action should alert you to the possibility that the person you are speaking to is trying to defraud you.If you get a call from someone who claims to be from the Internal Revenue Service, asks you money, and threatens to get you arrested, deported, or get your business or driver's license revoked if you don't pay the money immediately, you must know that it is not the IRS you are speaking to at all.The Internal Revenue Service is asking all people who receive such phone calls to call the IRS at 408-866-1810.

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IRS Least Popular Federal Agency

 Posted on October 22, 2013 in Taxation Law

The results of a new poll that was conducted recently confirmed what every California tax lawyer already knows-Americans have a very negative view of the Internal Revenue Service. The federal agency for tax matters was ranked at the bottom of the pile in popularity.The survey was conducted byPew Research, and found that overall, public trust in federal government agencies is at all-time record lows. However, overall, the poll also found that Americans have a favorable view of most government agencies and departments, and also have an overall positive view of federal workers. However, when it comes to the Internal Revenue Service, feelings seem to be not- so- positive.The respondents in the survey were asked to rate 13 federal agencies and institutions. Out of these, nine institutions were regarded favorably by 60% or more of the respondents. However, the IRS was the only federal agency which was rated more unfavorably than favorably by the public. Approximately 51% of the public expressed a negative view about the tax agency, while approximately 41% had a favorable opinion about the IRS. However, when it came to the other federal agencies that were included in the survey, most of the respondents had favorable opinions to express. For Instance, the Centers for Disease Control and Prevention received a 75% favorable rating in the survey, while the Veterans Administration got a 68% favorable rating. The Department Of Homeland Security was rated favorably by 66% of the respondents.Republicans seemed to have the worst opinion of the Internal Revenue Service, with just 23% having a favorable opinion of the agency. Approximately 65% of Democrats and 40% of independents expressed a favorable opinion of the Internal Revenue Service.

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Top IRS Official Resigns over Tea Party Tax Scrutiny Scandal

 Posted on September 27, 2013 in Tax Audits

The Internal Revenue Service has, for weeks now, been embroiled in a controversy that alleged that some of its top officials were involved in unfair scrutiny of Tea Party groups in tax matters. Lori Lerner, the official who was the subject of an investigation into the matter by Congress, recently retired.

The Internal Revenue Service recently released a statement, saying that Lerner has retired, effective immediately. Lerner served as the agency's former director of exempt organizations.

Since May, she had been placed on administration leave. An internal agency board was soon due to begin the process of firing her, based on breach of duties and mismanagement.

Lerner was in charge of that wing of the agency that is responsible for reviewing applications from groups claiming tax exemption. In 2010, however the office under Lerner began targeting some groups for further scrutiny in tax-related matters, based on whether they had the words "Tea Party" as part of their names.

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