Join me as I walk you through an introduction to IRS Appeals. In this podcast, I discuss the IRS Appeals process along with the following: •The Role of Appeals •Hazards of Litigation •What does Appeals Consider? •What issues can the TP Raise? •Overview of Appeals Process •Role of the Appeals team manager •What if agreement is reached? •What if agreement is not reached? •Independence of Appeals & Ex Parte •Non-docketed versus Docketed cases   To access the slides, click here.

Theater of The Courtroom

An Introduction to IRS Appeals

Join me as I walk you through the anatomy of a civil tax controversy from A through Z. This webinar will cover each step in the process, and will take a closer look at what to do during an eggshell audit. Other topics to be discussed include cases typically recommended for prosecution, attorney-client privilege in the tax realm, Kovel Agreements, IRS Appeals, and more. Learning Objectives: Gain an in-depth overview of the anatomy of a civil tax controversy from A through Z Develop best practices for walking your client through an eggshell audit Review attorney-client privilege in the tax realm Discuss the use of a Kovel Accountant and drafting an airtight Kovel Agreement Comprehend the IRS Appeals Process Evaluate the hazards of litigation To access the slides, click here.

Anatomy of a Civil Tax Controversy: Eggshell Audits and the Kovel Accountant

This is a webinar from a recent presentation that I did for CPA Academy. I am honored to lecture for such a fine CPE provider.

Is that Worker an Employee? Q & A's on Worker Classification Including the TFRP

This was a presentation that I did for CPAAcademy on February 26, 2019. I am honored to be a guest lecturer for this fine CPE provider. Enjoy.

How the IRS Reconstructs Income In Tax Fraud Cases - A Deep Dive

This is the last part of my presentation on, "Is that Worker An Employee? Questions and Answers on Worker Classification." The topic is "Requesting a Tax Court Determination."

Is that Worker An Employee? Part 2 - Requesting a Tax Court Determination

Course Description If you own or manage a business that uses independent contractors, you need to know when you can or cannot treat a worker as an independent contractor. This presentation answers some of the common questions about worker classification. INTRODUCTION Misclassification of employees as independent contractors is now a common phrase uttered by state and federal legislators and regulators. State task forces have been formed to crack down on businesses that do not pay unemployment insurance and workers’ compensation premiums or withhold taxes for workers whom the state believes are employees and not independent contractors.

IS THAT WORKER AN EMPLOYEE? QUESTIONS AND ANSWERS ON WORKER CLASSIFICATION

In this podcast, I discuss how to calculate the 5 percent miscellaneous offshore penalty under the streamlined domestic procedures. The miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance/value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance/value is determined by adding the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years. A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty if the asset should have been, but was not, reported on an FBAR (FinCEN Form 114) for that year. A foreign financial asset is subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset should have been, but was not, reported on a Form 8938 for that year. A foreign financial asset is also subject to the 5-percent miscellaneous offshore penalty in a given year in the covered tax return period if the asset was properly reported for that year, but gross income in respect of the asset was not reported in that year. For information on the meaning of foreign financial asset, see the instructions for FinCEN Form 114 and the instructions for Form 8938. For example, foreign financial assets may include: financial accounts held at foreign financial institutions; financial accounts held at a foreign branch of a U.S. financial institution; foreign stock or securities not held in a financial account;  foreign mutual funds; and foreign hedge funds and foreign private equity funds. 

On the Brink of Insanity: How to Calculate the Miscellaneous Offshore Penalty under the Streamlined Domestic Procedures

In this podcast, I discuss the instructions for making a submission to the streamlined domestic offshore program. For each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, submit a complete and accurate amended tax return using Form 1040X, Amended U.S. Individual Income Tax Return, together with any required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) even if these information returns would normally not be submitted with the Form 1040 had the taxpayer filed a complete and accurate original return.     Include at the top of the first page of each amended tax return "Streamlined Domestic Offshore" written in red to indicate that the returns are being submitted under the streamlined procedures.   Complete and sign a statement on the Certification by U.S. Person Residing in the U.S. (Form 14654) certifying: (1) that you are eligible for the Streamlined Domestic Offshore Procedures; (2) that all required FBARs have now been filed (see instruction 9 below); (3) that the failure to report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct; and (4) that the miscellaneous offshore penalty amount is accurate (see instruction 5 below). You must maintain your foreign financial asset information supporting the self-certified miscellaneous offshore penalty computation and be prepared to provide it upon request.     Submit payment of all tax due as reflected on the tax returns and all applicable statutory interest with respect to each of the late payment amounts. Your taxpayer identification number must be included on your check. You may receive a balance due notice or a refund if the tax or interest is not calculated correctly.   Submit payment of the Title 26 miscellaneous offshore penalty as defined above.     If you seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by an applicable treaty, submit:   a statement requesting an extension of time to make an election to defer income tax and identifying the applicable treaty provision; a dated statement signed by you under penalties of perjury describing: the events that led to the failure to make the election, the events that led to the discovery of the failure, and if you relied on a professional advisor, the nature of the advisor’s engagement and responsibilities. The documents listed above, together with the payments described above, must be sent in paper form (electronic submissions will not be accepted) to: Internal Revenue Service 3651 South I-H 35Stop 6063 AUSC Attn:  Streamlined Domestic Offshore Austin, TX 78741 Finally, for each of the most recent 6 years for which the FBAR due date has passed, file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined Filing Compliance Procedures. You must file these delinquent FBARs electronically at FinCen. On the cover page of the electronic form, select “Other” as the reason for filing late. An explanation box will appear. In the explanation box, enter “Streamlined Filing Compliance Procedures.”   

Instructions for Making a Streamlined Domestic Offshore Submission

Making Sense of the Statute of Limitations in Tax Cases

In this episode I discuss eggshell audits and what to do when it comes to filing returns for tax periods subsequent to periods under examination.

Eggshell Audits: Don't Get Cracked

In this podcast, I discuss the important inter-connections between civil tax and criminal tax. Below is a quick and dirty outline to help you follow along. Timing Since time and memorial, the government has proceeded w/ criminal tax investigation and prosecution first, suspending audit and collection until completion of the criminal proceedings This policy reflects several considerations, the most important of which is that civil discovery could reveal too early, too much of the government’s criminal case. The gov’t was concerned that TPs could use civil discovery procedures to find out more about its case than what the criminal discovery procedures otherwise allowed Why is the gov’t afraid of discovery of its case? Is the gov’t trying to send people to jail by secrecy or by ambush? That historic rationale has diminished. Prosecutors today are more inclined to err on the side of caution and tend to voluntarily disclose more in light of recent and notable cases admonishing prosecutors for withholding relevant - and in some cases - exculpatory evidence from the defense. Nonetheless, the gov’t strictly adheres to its historical practice of doing the criminal side first, with the sole exception being tax shelter cases. The gov’t works the civil and criminal sides simultaneously. Outside of the tax shelter context, the historic policy of “criminal first, civil later” is the norm Even if the gov’t doesn’t suspend civil proceedings, a judge might.   Civil liability and pleas A judge may be more inclined to allow a downward adjustment for acceptance of responsibility if TP-def. has paid or agreed to pay the tax liability TP loses nothing. Payment is n/ an admission of liability or an admission that the limitations period remains open. TP will still be able to argue about liability later. Nor does paying the tax eliminate the possibility of adjudicating this matter in a civil forum, such as U.S. Tax Court. TP can file a refund claim w/ the IRS  Civil Penalties When the gov’t gets around to the civil side, it will assert against TP n/ just deficiency and interest but also civil penalties Civil fraud penalties The most frequently asserted civil penalty is s. 6663 – the 800 pound gorilla of civil tax penalties A TP who fraudulently prevents (or minimizes) assessment of taxes may: (1) File a false return (S. 6663 penalty applies only to filed returns) or (2) Refrain from filing a return   Filed returns 6663(a) imposes a penalty equal to 75% of the portion of the underpayment that is attributable to fraud Joint returns: In the case of married-filing-jointly returns, fraud by one spouse is n/ attributed to the other. Under 6663(c), the penalty applies only to the spouse who the IRS proves to have committed fraud In order to assert fraud against one spouse, the gov’t must have evidence of fraud as to that spouse. The wife does n/ become liable for the 6663 penalty simply b/c the husband committed tax fraud. If the gov’t wants to pursue the wife for fraud, it must independently prove fraud as to the wife, separate and apart from the husband  How is fraud established? By badges of fraud Failing to maintain adequate books and records, Failing to file returns, Concealing assets 3. Accuracy-related penalty S. 6662 accuracy-related penalty is an alternative to the fraud penalty Under 6662(a), the penalty amount is 20% of the underpayment The penalty applies whenever any of six conditions is present 6662 comes up in the civil-criminal context in one of two ways: TP is acquitted for tax evasion. Gov’t doesn’t have a strong case of tax fraud when it gets to the civil side. Gov’t might assert 6663, or in the alternative, 6662. If the gov’t loses the fraud penalty, at least it can get the accuracy-related penalty which does not require a showing of fraud and thus might be easier to prove There is a jointly-filed return. The gov’t thinks that it can prove fraud against one spouse but n/ the other. The gov’t will assert fraud against one and 6662 (accuracy related penalty) against the innocent spouse 4. Delinquency penalties The civil penalty for failing to timely file returns is 6651(a)(1) 5. Other civil penalties There are a plethora of other civil penalties that parallel criminal penalties or could apply in circumstances in which criminal tax prosecution is a potential A number of civil penalties relate to tax advisers. For example, 6694(a) penalizes income tax return preparers who negligently advise TPs leading to tax understatements. And 6700 penalizes tax preparers who organize, sell interests in, or promote abusive tax shelters 

After the Dust Settles: Civil Tax Considerations Post-Conviction

In this podcast, I discuss the pre-sentence investigation report. Below is a quick and dirty outline: After conviction and prior to sentencing, a probation officer will interview the def. and prepare a PSR. In the PSR, the probation officer will: Calculate the defendant’s offense level and criminal history category, State the resulting sentencing range and kinds of sentences available, Identify any factors relevant to the kind of sentence (e.g., probation, imprisonment), Recommend a sentence w/in the applicable sentencing range, and Identify any basis for departing from the applicable sentencing range The PSR includes: The defendant’s prior criminal record, The defendant’s financial condition, and Information sufficient to calculate restitution The defendant is entitled to be represented by an attorney at the interview w/ the probation officer and I strongly recommend it. Why is the pre-sentence investigation report important? For the following two reasons: Judges give deference to the recommendations of the probation officer. Thus, the PSR is instrumental in the sentencing judge’s determination. Both the defense and the gov’t may make formal objections to the PSR but the judge resolves all such disputes under the preponderance of the evidence standard - a low standard indeed. Apart from the judge and sentencing, the PSR follows def. throughout his time in prison and can affect various decisions as to def. after the judge imposes sentence (i.e., the defendant’s life in prison and any period of probation or supervised release). Procedurally, once the PSR is prepared, the probation officer will provide a copy to the def., the defendant’s attorney, and the prosecutor. The defense and the gov’t have the opportunity to make objections to the PSR at the sentencing hearing, which consists of oral arguments before the judge. The rules of evidence do n/ apply to the admission of testimony or other evidence at the sentencing hearing. There are three times when defense counsel can have a big impact on the sentence that the judge imposes:  Situation 1: Defense counsel bargains w/ the prosecutor.   Situation 2: Defense counsel can work w/ the probation officer independently of the prosecutor – i.e., w/o forming an agreement w/ the prosecutor as in situation one. The goal is to try and get the probation officer to include favorable facts in the PSR. Situation 3: If the PSR contains something that you don’t like, you can make objections at the sentencing hearing that the PSR is wrong or should be modified by the judge and ask the judge to redact it from the pre-sentence investigation report. 

Criminal Tax Liabilities & Sentencing Part III: The Pre-sentence Investigation Report

Below is a quick and dirty outline of the steps that I cover in this podcast for determining the sentence of a defendant who has been convicted of a tax crime in federal court. If you would like the full outline, please email me or send me a message on Linked In. Enjoy! Step 1: Determine the base offense level by reference to the tax loss number Step 2: Adjust the offense level in light of specific offense characteristics Step 3: Calculating the sentence Step 4: Fines Step 5: Court will determine whether restitution should be imposed Step 6: Departures 

Criminal Tax Liabilities & Sentencing Part II: If You Can't Stand the Heat ...

This is a webinar that I presented in partnership with CPA Academy. I'm honored to lecture for such a fine CPE provider. For those who are interested in obtaining CPE credit, click here to sign up. Below is more information about the program: Course Description In one of the climactic scenes from 1954’s On The Waterfront, Crime Commission prosecutors had to make their corruption case against union boss Johnny Friendly (a/k/a Michael Skelly) by convincing a reticent yet pure-hearted Terry Malloy to come forward and tell what he knew about corruption in the International Longshoremen’s Association, beginning with the murder of Joey Doyle, because an underling insisted that “we were robbed last night and can’t find no books.” If that same case came up in 21st Century tax court, Eva Marie Saint and Karl Malden could’ve stayed at home rather than serving as Marlon Brando’s cheering section, because government prosecutors could reconstruct the ILA’s income, based on the records retention requirements in Section 6500 et seq. In other words, the conventional wisdom that only divine beings can create something out of nothing does not apply in income tax evasion cases. Is it enough for the government to pull a metaphorical rabbit out of a metaphorical hat, or are there some additional requirements? Learning Objectives: Elements of Tax Evasion Define Substantial Tax Deficiency Methods of Proof 

HOW THE IRS RECONSTRUCTS INCOME IN TAX FRAUD CASES - A PRESENTATION

This is the first of several parts. There is a lot of information to discuss that it might feel like drinking water out of a fire hydrant. Sentencing issues are arguably the most important part of a federal criminal tax case. Because the likelihood of conviction is so high, the best that defense counsel can do for his client is minimize the sentence. The law surrounding federal criminal sentencing is in a stage of upheaval. The Booker case fundamentally altered the legal landscape. This is an unsettled area. This podcast will cover five topics:  The U.S. sentencing guidelines – generally Sentencing procedures Booker and its immediate aftermath Specific applications of the sentencing guidelines to criminal tax prosecutions. Recent developments Enjoy the show!  

Criminal Tax Liabilities & Sentencing: Part I

“THEATER OF THE COURTROOM” is a podcast designed to help trial lawyers “bring the life back to the law” by making a positive connection with jurors so that they will be open to our arguments. It’s also designed to help tax professionals simplify “tax speak” so that it can easily be understood by a lay audience. Each week, Mike interview some of todays most successful public speakers, lawyers, and members of the theater arts community. They share their wisdom and insights on how to master stage presence and dramatic techniques – both in the courtroom and the boardroom.The host Michael DeBlis is a trial lawyer who puts his heart and soul into fighting for his clients. He's on a mission to help trial warriors ( along with himself ) break through the self-imposed barriers that they have set for themselves so that they can present and rock the talk.

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Theater of The Courtroom

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