Did You Know?

In Canada, makers of children’s breakfast cereal are granted a tax exempt status if their cereals contain free toys. However, this exemption is limited to toys that are not “beer, liquor, or wine.”

Contact McCauley Law Offices, P.C. today to discuss your TAX JAM and get the IRS off your back!

IRS Tax Tip 2022-95: Year-round tax planning: All taxpayers should understand eligibility for credits and deductions

If you had a 50% off coupon for your favorite store, and the products you are purchasing are eligible for this discount, why would you want to shell out more money that you had to? The same goes for your taxes! Your hard earned dollars are better off in your bank account than the IRS’ pockets.

Navigating tax credits and deductions can be overwhelming for taxpayers trying to ensure they take advantage of the decreased amount owed when applied correctly. Proper planning regarding eligibility for credits and deductions is imperative to ensure your return is filed correctly, paying only what you owe, and nothing more. Below are some tips straight from the IRS website to help prepare you to utilize those tax credits and deductions to your advantage for your 2022 returns!

When the IRS comes knocking, let us answer. Contact McCauley Law Offices, P.C. today for help getting out of your Tax Jam.

IRS Tax Tip 2022-95: Year-round tax planning: All taxpayers should understand eligibility for credits and deductions

Tax credits and deductions can help lower the amount of tax owed. All taxpayers should begin planning now to take advantage of the credits and deductions they are eligible for when they file their 2022 federal income tax return next year.

Here are a few facts that can help taxpayers with their year-round tax planning:

  • Adjusted Gross Income, or AGI, is a taxpayer’s total gross income minus specific deductions that can reduce the taxpayer’s income before calculating tax owed. AGI is the starting point for calculating taxes and determining a taxpayer’s eligibility for certain tax credits and deductions that can help lower their tax bill.
  • Taxable income is a taxpayer’s AGI minus the standard deduction or itemized deductions, whichever is greater.
  • The standard deduction is a set dollar amount that reduces taxable income. Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions and using the option that lowers their tax the most.
  • Properly claiming tax credits can reduce taxes owed or boost refunds.
  • Some tax credits, like the earned income tax credit, are refundable, which means an eligible taxpayer can get money refunded to them even if they don’t owe any taxes.
  • To claim a deduction or credit, taxpayers should keep records that show their eligibility for it.

Dentist and Wife Get Their Teeth into More Than They Can Chew

An Alaska dentist and his wife, Glenn and Saray Lockwood, have been charged with tax evasion, bankruptcy fraud, wire fraud and money laundering.

The couple is accused of evading 3.5 million dollars in federal income taxes starting in 2013.

To impede IRS collection efforts, the couple filed a false bankruptcy claim. They later formed an LLC and transferred the bulk of their assets into it, in the hopes of fooling the IRS and the bankruptcy court. During court hearings they denied they owned the LLC.

Glenn Lockwood previously served five years in prison for tax evasion and has been accused of deducting nearly all expenses as business expenses, including clothes, groceries, gas and a $1,504 charge to Mabel’s House of Prostitution in Nevada.

They each face up to 30 years in prison. However, while Glenn Lockwood is in prison awaiting trial, his wife has fled to her native Colombia.

Contact McCauley Law Offices, P.C. today to discuss your TAX JAM and get the IRS off your back!

IRS Interest Rates Increase for the Third Quarter of 2022

The Internal Revenue Service announced that interest rates will increase for the calendar quarter beginning July 2022. The rates will be:

5% for overpayments (4% in the case of a corporation).
2.5% for the portion of a corporate overpayment exceeding $10,000.
5% for underpayments.
7% for large corporate underpayments.

The interest rate is determined on a quarterly basis per the Internal Revenue Code. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.

Per the IR-2022-107: “Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points, and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.”

The interest rates are computed based on daily compounding from the federal short-term rate determined during April 2022 to take effect May 1, 2022.

The Buck Stops Here Says the IRS

Devon Buck, the owner of DCL Landscaping in Pennsylvania, has been charged with attempting to evade income taxes.

From 2015 to 2019 Buck tried to evade $203,324 in federal income taxes by requesting that many of his clients make checks payable to him personally as opposed to the company. Buck went as far as printing invoices on DCL letterhead that specifically instructed customers on how to make out their checks.

During that time period, Buck diverted $677,877 of business income by cashing customer checks instead of depositing them in his business bank account. He deposited only $240,749 of customer payments into the business account.

To further conceal the business income from the IRS, Buck provided his accountant with false business receipts and expenses, which underreported his income.

In addition to restitution, Buck faces up to five years in prison.

Contact McCauley Law Offices, P.C. today to discuss your TAX JAM and get the IRS off your back!

Stanford University Employee Flunks Out

Patricia Castaneda, who worked in the School of Humanities and Sciences at Stanford University, was sentenced to prison for stealing Apple MacBooks that were meant for faculty and staff members.

Ordering the MacBooks was one of her duties in her position. And from 2010 to 2016 she sold the MacBooks to someone she met on Craigslist. In 2016 she began giving the stolen computers to her brother, Eric Castaneda, who found a new buyer for the stolen goods.

Castaneda stole over four million dollars’ worth of MacBooks from the school. Of that, her brother resold 2.3 million dollars’ worth. Neither of the siblings reported the income from the stolen goods on their tax returns.

Patricia Castaneda was sentenced to 33 months in prison and ordered to pay restitution in the amount of $4,077,832. Eric Castaneda was sentenced to 18 months in prison and ordered to pay restitution in the amount of $2,283,155.

Contact McCauley Law Offices, P.C. today to discuss your TAX JAM and get the IRS off your back!

Is it Bad to Settle With the IRS?

You may have heard on the radio, TV, and online, that you can settle your tax bill for less than what you owe. But are these claims actually true? And can you really settle your tax debt without hurting yourself in the long run?

Some of these national tax resolution firms you hear advertising offer very little service, just look at their Google and Yelp Reviews.  So it’s important to know who to trust and get educated on what your options are to resolve your tax problem.

As an expert Tax Resolution Firm, we encourage all readers facing a tax problem to contact us for a free consultation.

The truth is that though it’s often harder than they claim to settle for less than you owe the IRS, it is possible, and you must first learn if you qualify for the program. This is called an “offer in compromise,” but settling is not necessarily a bad thing.

An “offer in compromise” is a negotiated settlement between the taxpayer and the IRS that is intended to help taxpayers who owe more than they can pay. In a lot of cases, you can settle your entire tax bill for a fraction of what you owe, if you qualify. You can only get one if you genuinely can’t afford to pay back taxes or if doing so would cause extreme hardship. This can apply, for example, if you have become disabled.

You have to be current on all legally required income tax returns and must be current on any estimated tax payments if you are self-employed and you cannot file for bankruptcy.

The IRS would rather take an offer in compromise than send you to collections and potentially get less money. Taking an offer in compromise will NOT affect your credit score. Having your offer in compromise accepted is a far better financial decision in the long run.

However, working out what offer to make on your own and learning the whole process can be challenging. That’s like representing yourself in a court of law without a lawyer.  Not smart. A better answer is to find a tax resolution specialist that can help you with the process to see if you qualify and determine what you will have to pay. A tax resolution specialist will also be a licensed CPA, Enrolled Agent or an Attorney.

One of the great things about working with a qualified tax resolution firm is that you get protection from the overbearing IRS, letting you sleep better at night knowing you’re on your way towards permanent tax resolution. They can head-off any impending garnishments of your paycheck or levies on your bank account.

Settling with the IRS is a good thing and is often the best answer to dealing with your back tax bill and moving on with your life.

If you want an expert tax resolution professional who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.

North Carolina Counselor $53,971 IRS liability settled for $1,674

Sometimes counselors need help too!

When this Counselor was too stressed over her $53,971 tax liability, she sought out McCauley Law Offices, P.C. to get her out of her Tax Jam. Upon reviewing her case, we determined that she qualified for a settlement agreement, also known as an Offer in Compromise with the IRS.  After almost of year of negotiations with the IRS, our team obtained a settlement of $1,674 on her $53,971 tax liability.

When the IRS comes knocking, let us answer. Contact us today!

 

If You Don’t Have Money to Pay Your Taxes, You Have Legitimate Options

If you owe the IRS but you don’t have the money to pay what you owe, it is important to know that you have a few options to work with. Whatever you do, don’t ignore the letters from the IRS and don’t let your back tax problem go unattended. The IRS has a great deal of power when it comes to recovering money they think is theirs.

When you owe the IRS money they can garnish your wages, levy your bank accounts, put a lien on your home and seize other assets.

Here’s what you can do if you find yourself not being able to pay your taxes. Note, we always recommend getting in touch with a tax resolution professional to help avoid the harsh penalties and interest that accrued on your back taxes. It’s far easier to navigate towards tax resolution if you have a professional working on your behalf. If you’d like to schedule a no-cost confidential tax relief consultation, contact us.

First, make sure that you file your returns

Even if you have no hope of being able to pay your taxes, you must at least file your income tax returns. Whatever the penalties are for not paying your taxes, the penalties for not filing are much larger and non-filers can be subject to a criminal investigation. . The IRS will remove penalties for not filing and not paying but you have to have a good reason. We can request to have your penalties removed or reduced. It’s also important to remember that when you file for an extension, it only gives you more time to file. Your payment date remains unchanged.

Revisit your W-4 withholdings

If your employer withholds money from your salary to pay your taxes with, you shouldn’t have to worry about paying anything extra from that income source. If you do owe more, it’s a sign that your withholding exemptions are incorrectly reported on your W-4 form. To make sure that you don’t get into tax trouble repeatedly, you should make sure your W-4 form is correct and get advice from a tax professional about the kind of withholdings necessary for exemptions.

Make a partial payment

If you can’t afford to pay all that you owe, you should pay whatever you can. While you will still be hit with interest and penalty charges, they will be smaller than they would be if you paid nothing. These charges are proportional to what you owe the IRS.

Try to work with the IRS

If you can’t pay, there are resolution options available to you if you qualify for them. They include a payment plan or an offer in compromise to name a few. You need to first step up and admit to your inability to pay, though.

An offer in compromise is an agreement between the IRS and the taxpayer that allows the taxpayer to settle their debt for less than the amount owed. Sometimes, for a fraction of the amount owed.  There are strict eligibility requirements, and you should consult with a tax resolution specialist first.

An installment agreement, aka payment plan, is an agreement between the IRS and the taxpayer that permits the taxpayer to pay back their debt over time, generally in 60-72 months. Depending upon the amount owed, and ability to make monthly payments, determines the type of installment agreement the IRS will allow, as there are several variations of these payment plans.  An experienced tax resolution specialist will guide you through the maze and myriad of these different options.

If you need an expert tax resolution provider who knows how to navigate the IRS maze, reach out to our firm and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.

Sheriff’s Deputy Really a Crook in Disguise Defrauding Investors

A former California sheriff’s deputy, Christopher Burnel, pleaded guilty to wire fraud and filing false tax returns.

Burnel deceived victims into investing 5.6 million dollars with him by claiming that he was an entrepreneur who had made millions from lawsuits against the San Bernardino Sheriff’s Department and Kaiser Permanente. He also told potential victims that he had sold a patent to an air cooled, bullet proof vest, and made a fortune through investments in small businesses and money lending.

He promised his victims returns as high as 100% and had them invest a small amount to begin with, which he returned with big dividends, to gain their trust.

None of the investment opportunities Burnel claimed existed, and he spent the money on maintaining a life of luxury for himself and his girlfriends. He spent $500,000 on trips on private jets, $70,000 on Louis Vuitton merchandise, $175,000 on luxury cars and an apartment lease for his then girlfriends. He also lost more than two million dollars gambling at the San Manuel Casino.

Contact McCauley Law Offices, P.C. today to discuss your TAX JAM and get the IRS off your back!