Top 5 tax scams to avoid

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The IRS knows about these common tax scams and are pursing individuals who participate in them with fines and penalties.  

1. Hiding Income Offshore The IRS aggressively pursues taxpayers involved in abusive offshore transactions and the promoters who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts, or by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or life insurance plans.

In February, the IRS announced a second voluntary disclosure initiative to bring offshore money back into the U.S. tax system. The new voluntary disclosure initiative will be available through Aug. 31, 2011.

2. Phishing Scam artists use phishing to trick unsuspecting victims into revealing personal or financial information. Scams take the form of e-mails, phony websites or phone calls that offer a fictitious refund or threaten an audit or investigation to lure victims into revealing personal information. The IRS never initiates unsolicited e-mail contact with taxpayers about their tax issues. Phishers use the information to steal the victim’s identity, access their bank accounts and credit cards or apply for loans. Please forward suspicious scams to the IRS at phishing@irs.gov. You can also visit www.irs.gov, keyword phishing, for additional information.

3. Return Preparer Fraud Dishonest tax return preparers cause trouble for taxpayers by skimming a portion of the client’s refund or charging inflated fees for tax preparation. They attract new clients by promising refunds that are too good to be true. To increase confidence in the tax system, the IRS now requires all paid return preparers to register with the IRS, pass competency tests and attend continuing education. Taxpayers can report suspected return preparer fraud to the IRS on Form 3949-A, Information Referral.

4. Filing False or Misleading Forms The IRS continues to see false or fraudulent tax returns filed to obtain improper tax refunds.

Scammers often use information from family or friends to file false or fraudulent returns, so beware of requests for such data. Don’t claim deductions or credits you are not entitled to and never willingly allow others to use your information to file false returns. If you participate in such schemes, you could be liable for financial penalties or even face criminal prosecution. The IRS takes refund fraud seriously, has programs to aggressively combat it and stops the vast majority of incorrect refunds.

5. Frivolous Arguments Promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on www.irs.gov. These arguments are false and have been thrown out of court repeatedly.

For the full list of 2011 Dirty Dozen tax scams or to find out how to report suspected tax fraud, visit www.irs.gov.
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This information is from the IRS TAX TIPS HOTLINE

What is an IRS Audit?

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An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.

Publication 556, Examination of Returns, Appeal Rights and Claims for Refund explains the audit process in more detail.

 

IRS Audit Selection

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Audit Selection

Selecting a return for audit does not always suggest that an error has been made. Returns are selected using a variety of methods, including:

Random selection and computer screening – sometimes returns are selected based solely on a statistical formula.
Document matching – when payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
Related examinations – returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.

IRS Audit Methods

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An audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). The IRS will tell you what records are needed. Audits can result in no changes or changes. Any proposed changes to your return will be explained.

Your Rights in an IRS Audit

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Publication 1, Your Rights as a Taxpayer, explains your rights as a taxpayer as well as the examination, appeal, collection, and refund processes. These rights include:

  • A right to professional and courteous treatment by IRS employees.
  • A right to privacy and confidentiality about tax matters.
  • A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
  • A right to representation, by oneself or an authorized representative.
  • A right to appeal disagreements, both within the IRS and before the courts.

IRS Audit Records Requirements

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A written request for specific documents needed, will be provided to you.

The law requires you to retain records used to prepare your return. Those records generally should be kept for three years from the date the tax return was filed.

The IRS does accept some electronic records. Contact your auditor to determine what can be accepted to ensure a software program is compatible with the IRS’s.

When should a Probate be opened in Nevada?

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Information provided by the State Bar of Nevada  http://www.nvbar.org/sites/default/files/probate%20and%20administration.pdf

As soon as practical following the person’s death.  In Nevada, if the total amount of the deceased person’s assets exceeds $20,000, or if real estate is involved, probate (or administration) will be required and there is normally no reason to delay starting the process.  Nevada law requires a person in possession of the deceased person’s will must “deliver it to the clerk of the district court” within 30 days of the death. If a Probate or Administration of an estate is not required,
how do I inherit a deceased person’s assets?

If there are no real estate holdings and the value of the estate does not exceed $20,000, certain surviving family member(s) or a person entitled to inherit the property from the estate may initiate proceedings 40 days after the death.  Without any court proceeding, these parties may use a form called Affidavit of Entitlement permitting the release of the assets from any person or business holding those assets (such as a bank, stock brokerage company or pension plan  administrator).

 

What is probate

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Probate is a court-monitored process of proving the validity of a will, transferring property, and settling the affairs of the deceased’s estate.  If there is no will, a similar process known as Administration is used to settle the deceased’s affairs.

Information provided by the State Bar of Nevada

Do I Need a Will?

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I hear this question quite a bit. The answer is not always a yes or a no. However, after talking to your attorney you should have a better idea on whether a Will is something that you need. To start you should know some of the benefits of having a Will and also some of the reasons that not everyone needs a Will.

One of the biggest benefits to having a Will is being able to control what happens to your estate when you die. If you do not have a Will, then your estate will be subject to varying state laws. So, if you are married, do not count on everything being passed to your spouse. Some states have adopted laws that split your estate between your spouse and your children. With a Will you have the choice of who receives your estate and what percentage.

Another benefit is naming a guardian for minor children. If something were to happen to you and/or the other parent who do you want to care for your children? A Will provides a simple way to make sure that your children do not end up with someone that you feel is unprepared or unsuited to take care of your children.

Finally, a Will gives you the choice of appointing someone to take care of your final wishes. If you do not feel like your spouse or close family members have the ability to successfully carry out your wishes then a Will gives you the power to name someone that you feel more comfortably about.

There are some reasons that you may not need a will. For example, life insurance, pension accounts, joint accounts, and revocable trusts are all devices that an owner can name a beneficiary during life, and the asset will transfer to the named beneficiary at the time of the death of the owner without the need of probate or a will.

If you have questions or need advice you should contact an estate planning attorney to assist you. As with other areas of law, the estate planning rules change from time to time and vary state to state.

 

Cort Arlint presents at a town hall foreclosure meeting

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Local Pros Dispense Free Advice

Written by  Jared Bogens Francisco

Nevada may be known as the Silver State, but right now the general economic decline that is being felt around the country, along with other financial problems, has given the state more than its fair share of hardship.

People are fighting to keep their homes, jobs, and businesses, and in some cases, their spouses and children.

In an effort to help Henderson residents with some of those concerns, a small panel of experts including a realtor, a marketing specialist and a handful of lawyers from various fields conducted a free panel on April 12 to help address some of the issues that are plaguing the residents of Henderson. The group will hold a second panel, also free, on May 10 at 7 p.m. at Ticor Title, 2240 Paseo Verde Pkwy.., Ste. 190.   With so many residents financially broke, out of work, or just in a difficult financial situation, words like bankruptcy, foreclosure, and short sale are quickly becoming all too familiar with the general public, yet most people fail to understand the exact nature of those terms or their implications, panel members said.

The members of the panel all specialize in different fields and bring a range of different perspectives that allows them to see other aspects of the problems that they deal with on a day-to-day basis. The joint effort of this group aims not only to help those who attend, but also to give everyone involved a fresh new look at financial problems and, possibly, solutions that are more palatable.

Financial planner Jocelyn Holzwarth told those in attendance that one of the biggest and most commonly made mistakes is to simply quit making payments on the seemingly insurmountable debts. Many who are feeling the increasing pressure from foreclosures and dwindling home values simply decide to stop paying on their homes and inadvertently give up options that could not only help them in their struggle but, in most cases, they didn’t even know they were entitled to, she said.

Another small bit of advice, given by certified public accountant and attorney Cort Arlint, is that people with more than one residence can usually keep their primary residence; however, depending on what they do with other big-ticket items, such as cars, boats, or other homes, those items could actually end up counting as a source of income and be subject to taxes, fines or other penalties.

All in all, the seven-person panel of professionals was there to help give advice. In many cases, these financial problems, which are enough trouble by themselves, are often compounded by others issues, such as divorce.

It is especially because of the complexity of this national financial crunch that most people don’t even know how to begin to deal with these problems, panel members said, which is why they hope to help at least a few by lending their expertise.

 

Copy of an article written by the Henderson Press and can be found at the following URL  http://www.hendersonpress.com/business/item/395-local-pros-dispense-free-advice