by Fresh Start Tax | Aug 27, 2013 | IRS Tax Audit
TEFRA – Tax Audits
On staff are IRS TEFRA Experts.
One of our Former IRS Agent was a Appeal Agent who was the coordinator for the TEFRA and is a specialist in all TEFRA issues and audits.
The audit procedures for a TEFRA partnership are one of the most complex in the Internal Revenue Code. The partner known as the Tax Matters Partner acts as the liaison between the IRS and the partners.
We are comprised of tax attorneys, certified public accountants, and former IRS agents, managers and tax instructors.
We have over 206 years professional tax experience and over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the Internal Revenue Service.
We are A+ rated by the Better Business Bureau and have been in private practice since 1982.
TEFRA
If you are a partner in a partnership with eleven and more partners, you are a partner in a TEFRA partnership.
The Tax Matters Partner (TMP)
The Tax Matters Partner (TMP) is responsible for keeping partners informed of tax administrative and judicial proceedings relating to the partnership. The TMP has the authority to extend the statute of limitations for assessment with respect to partnership items on the behalf of all partners.
He can bind partners holding less than 1% interest in the partnership to a settlement with the IRS and determine in forum to litigate a partnership controversy.
Due to the complexity of the TEFRA audit procedures, the IRS in many instances fails to follow all of the required procedures for the examination of the partnership.
Further, there may be instances that the TMP and the remaining partners may have a conflict of interest as to specific matters which you may not be aware.
The audit of a TEFRA partnership can be appealed to the Appeals Division and if needed can be litigated in the Tax Court or Court of Federal Claims.
All of these appeals are complex and full of unexpected results to the unwary partner.
You may have been assessed a deficiency based on an audit of a TEFRA partnership and not know it, until you receive a bill from the IRS for the deficiency. TEFRA deficiencies are assessed through computational adjustments, which means you have no appeal rights.
The appeal rights are through the TMP, if he did not exercise them; those appeal rights are expired. So its up to you to be in contact with the TMP when the partnership is being audited and keep current with the proceedings.
There are instances where the IRS has made an assessment of a deficiency attributable to TEFRA partnership adjustment that was not valid and the partner simply paid the deficiency amount without questioning it.
If your TEFRA partnership (eleven or more partners) is being audited, you need to know what is going on because your interest with the TMP may conflict.
If you are a partner in a TEFRA partnership that is being audited, you need someone from the outside of the partnership to inform you of your best plan of action that you should take.
What is TEFRA
Definition of ‘Tax Equity And Fiscal Responsibility Act Of 1982 – TEFRA’
Federal tax legislation passed in 1982 that modified some aspects of the Economic Recovery Tax Act of 1981 (ERTA). Both of these pieces of tax legislation took place during the Reagan Presidency.
Tax Equity And Fiscal Responsibility Act Of 1982 – TEFRA
The ERTA was a piece of tax legislation that greatly lowered income tax rates, and all very high rates were given a maximum of 50%. The TEFRA modified aspects of the ERTA which caused concern over potential large budget deficits.
TEFRA increased the tax received but not the tax rates. This was done by removing some of the tax breaks businesses received in the ERTA, such as the increase in the amount of accelerated depreciation that a company could deduct.
This chapter is designed to give the reader a basic understanding of TEFRA (the Tax Equity and Fiscal Responsibility Act of 1982) and is not intended to be a fully comprehensive work. Certain topics are covered by referencing statutes, regulations, or the Internal Revenue Manual (IRM) rather than by way of narrative text.
The Resources section lists several published sources which, when viewed together, should present a fully comprehensive and up-to-date picture of TEFRA.
In addition, there is a web-based self-study course, TEFRA Basics, which can be taken online at the Enterprise Learning Management System (ELMS) website.
Once you have registered and created a profile on the ELMS website, TEFRA Basics can be found as ELMS Component Number: 11381.
Another important TEFRA tool for the examiner is the IRS Intranet consolidated TEFRA website.
This chapter will address TEFRA only as it applies to TEFRA partnerships and TEFRA related partners. It is important to note that Limited Liability Companies (LLCs) and Real Estate Mortgage Investment Conduits (REMICs) that file a Form 1065, U.S. Return of Partnership Income, and their respective members are also subject to TEFRA administrative and judicial procedures and treated in a manner similar to TEFRA partnerships and their partners.
IRC section 6244 extended the TEFRA partnership provisions to S corporations for tax years beginning after 1982. The Small Business Job Protection Act of 1996 repealed the TEFRA administrative and judicial procedures for S corporations for tax years beginning after Dec. 31, 1996.
TEFRA as it applies to S corporations and REMICs will not be covered in this chapter. Non-TEFRA partnership statute considerations and procedures are also not covered in this overview. The procedural differences between TEFRA and non-TEFRA are significant.
IRC sections 6221 through 6234 govern audit, administrative, and judicial procedures, as well as certain filing requirements to be used by entities qualifying as TEFRA partnerships.
These procedures are commonly referred to as “unified proceedings”, “TEFRA proceedings”, and “partnership proceedings.” These Code sections provide that examination, administrative, and judicial actions are to be conducted at the partnership-level.
Final Regulations
Final Regulations were issued and are effective for taxable years beginning on or after October 4, 2001 (66 FR 50541, Treas. Reg. sections 301.6221-1 through 301.6233-1). For taxable years beginning before October 4, 2001, the Temporary Treasury Regulations continue to govern (see Treas. Reg. section 301.6221-1(f)). The Final Treasury Regulations are substantially similar to the temporary regulations.
TEFRA – Tax Audits – IRS Representation, Former Agents
by Fresh Start Tax | Aug 27, 2013 | Florida Sales Tax
Florida Sales Tax Audits Experts – Auto Dealerships
Florida Department of Revenue in their never ending search for more funds have been pursuing more audits and targeting specific industries like retail Auto Dealerships because there is low hanging fruit for a revenue agent to pick. There is always a gold mine to be found.
Frank Lamantia of Fresh Start Tax LLC is one of own seasoned tax professionals that and represent your best interest if you are undergoing a Florida Sales Tax Audit. Frank is a 16 year vet of the Department.
Both New Car and Used Car Sales are both targeted
If you own a used car dealership in Florida you are aware that the Florida Department of Revenue has always given a lot of attention to the industry.
Used car dealerships especially small dealerships are in the business of selling used cars and their records are not always complete due to limited staff.
The Department of Revenue is aware of this issue and consequently targets small used car dealerships.
Here is some facts to be aware.
Exempt Sales – Complete and detailed records are required for all exempt sales:
- a Florida registered motor vehicle dealer buys the vehicle for resale or lease and provides the seller there Current Annual Resale Certificate
- the seller delivers the vehicle outside of Florida
- a Florida registered export/import company buys a vehicle for resale and will immediately export it outside of Florida (documentation required)
- a nonresident dealer who does not have a Florida sales tax number buys a vehicle for resale or lease and extends a completed resale form to the selling dealer
- a nonprofit organization buys a vehicle and presents a current Florida Consumers Certificate of Exemption (DR-14) to the seller
Partially exempt motor vehicle sales:
- if the Veterans Administration pays a portion of the invoice that portion the VA pays directly to the dealer is exempt
- if a Florida dealer sells a motor vehicle to a resident of another state that imposes a sales tax of less than 6% and the buyer takes possession of the vehicle in Florida, the buyer’s home state tax rate may be applied to the sale. Other restrictions may apply
- in order to be eligible was a lower tax rate, the buyer must give the dealer a completed, notarized Affidavit for Partial Exemption Motor Vehicle Sold for Licensing in Another State(DR-123), declaring his or her intent to license the vehicle in his or her home state within 45 days of the date of the sale.
Currently, the states of Arkansas, Mississippi, and West Virginia impose a sales tax on motor vehicles, but they do not allow a credit for taxes paid to Florida.
Residents of these states should be informed that they must pay sales tax to Florida at this rate imposed by their home state when they purchase a vehicle in Florida and must also pay tax to their home state with the vehicle’s license in their home state.
Please Note:
1. all tax collected must be paid to the Florida Department of revenue. The tax must never be sent to the buyer’s home state.
2. if a vehicle is bought by a nonresident corporation or partnership, taxes due if any officer of the Corporation, or any stockholder or partner who owns at least 10% of the corporation or partnership, is a Florida resident.
However, if the vehicle is removed from Florida within 45 days after purchase and remains out of the state for a minimum of 180 days, the purchasing entity may qualify to pay its home state tax rate despite the residency of its owners, stockholders or partners.
Businesses that sell, repair, rent, or provide services are required by the state of Florida law to act as an agent for the state and collect and remit sales taxes due to the state of Florida in a timely manner.
Also Florida sales tax is required to be separately stated in the customers invoice in the taxes collected are the property of the state from the moment is collected from the customer. Business owners must segregate sales tax collected and remitted to the state in a timely manner.
The Florida Department of Revenue has a task force to review the records of every used car dealership in Florida by comparing sales tax returns to Department of Motor Vehicle records.
Beware: It is a crime under Florida law for Unremitting Sales Tax Collected
Take this very seriously!
Some recent prosecutions
(name omitted), the owner of BAS Specialty Cars Inc., a used car dealership that is located in Longwood, Florida has been arrested on charges that she stole more than $67,000 in sales tax she collected from customers, but failed to send in to the state, the Florida Department of Revenue announced today.
know
(name omitted), was arrested by the Seminole County Sheriff’s Office on a felony charge relating to theft of state funds. If convicted, she faces up to 15 years in prison and up to $10,000 in fines, as well as possible repayment of stolen sales tax, along with payment of penalty and investigative costs. BAS Specialty Cars is located at 1580 South Ronald Reagan Blvd. in Orlando.
According to Revenue Department investigators, (name omitted) collected tax from customers at the dealership. However, during various periods beginning in 2009, lasting through periods in 2012, she failed to send in to the state all of the sales taxes that were collected.
The Florida Department of revenue is more likely to arrest a business owner for tax fraud than the Internal Revenue Service.
Both IRS and the Florida Department of revenue will put tax liens on a business property; the Florida Department of revenue will also put the business owner in jail if the taxes, penalties, interest are not remitted.
If you have collected and not remitted Florida sales tax please contact a firm experienced in Florida sales and use tax criminal defense for confidential discussion as to the options. There are ways for individuals to negotiate with the state and enter into a payment plan.
It can be a trying task to come up with the cash flow for a payment plan but is far better than jail. Any admission to the Florida Department of revenue can be used against you in a criminal trial therefore is very wise to have an attorney speak on your behalf.
As a general rule sales tax payments are not mentioned or tracked on the dealerships books and records generally because they are not a dealership expense. Car dealers are the collectors of the taxes that are ultimately remitted to the state on a timely basis.
However, dealership owners can be held liable for mistakes in the way taxes are remitted. The Florida Department of revenue has the ability to compare sales tax records with the Florida Department of motor vehicle records to make sure the company’s sales tax records match the cars that are being registered in Florida and purchased from that specific dealership.
A Florida sales tax audit can be a very expensive educational lesson for compliance with the Florida sales tax laws.
A system has been created by the Florida Department of revenue to download the entire Department of motor vehicle database, and then compare sales tax registration numbers to Department of motor vehicle dealer registration numbers and create a usable database with information that can be used to trigger an audit or criminal investigation or used in an ongoing audit of a specific dealer and the dealer’s sales tax returns.
In the past 18 months there have been several arrests throughout the state of Florida for sales tax theft.
The Florida Department of revenue is targeting used as well as new car dealerships for audits and possible criminal investigation.
Form DR 840 notice to audit books and records could be coming your way this month or within the next six months.
Voluntary Disclosure:
If you have been under reporting or not reporting and you have not received a notice of audit, it is highly recommended that you contact our firm and we will assist your dealership in the process of going through a voluntary disclosure program to come clean now with the Florida Department of revenue, have most of the penalties waived and prevent it from becoming criminal.
We are a full-service tax firm that specializes in federal tax representation and are one of Florida’s most experienced for sales tax audit defense.
Our staff consists of tax attorneys, certified public accountants, former IRS agents and a former sales tax auditor with over 16 years of direct work experience with the Florida Department of revenue.
Feel free to contact us for initial tax consulting for Florida sales tax audit defense.
We will completely review your case and give you a full assessment of your audit status so you can make an informed and confident decision of how to fully resolve your sales tax audit case
Florida Sales Tax Audit Experts – Car, Auto Dealerships – Insider Tips
by Fresh Start Tax | Aug 26, 2013 | Tax Help
We are Former IRS agents and Managers who know the system.
IRS Bank Levy Notice Help – Process for IMMEDIATE REMOVALS of the IRS Levy 1-866-700-1040
IRS files over 3 million levies a year. You are not alone.
The good news here, the bank is holding your money for 21 days, your money is just frozen.We can get you Bank Levy Released and settle your case.
If you have received an IRS bank levy notice there is a process to get immediate release or removal from the IRS bank levy.
If you need to get an immediate release of a bank levy notice or a wage garnishment by the Internal Revenue Service contact us today and speak directly to tax attorneys, tax lawyers, certified public accountants or former IRS agents and managers.
We can get your IRS bank notice Levy released or removed and settle your tax debt with the Internal Revenue Service.
We have over 60 years of working directly for the Internal Revenue Service in the local, district, and regional tax offices of the Internal Revenue Service.
We also taught tax law at the Internal Revenue Service and were instructors of new IRS agents.
We know the exact protocol and tax strategies that needs to be employed to get immediate releases of the IRS bank levy. While employed at the Internal Revenue Service we issued thousands of IRS bank levies so it would only make sense that we would know the process of releasing or removal process
We have got hundreds upon hundreds of immediate release on a the IRS bank levy notice.
We are A+ rated by the Better Business Bureau and have been in private practice since 1982. We have 206 years a professional tax experience in dealing with the Internal Revenue Service.
The Good News, the Holding Period for the IRS Bank Levy Notice
The IRS cannot immediately take your money out of a financial institution.
There is a freeze or holding period on the Bank Levy Notice.
A bank must wait 21 calendar days after a levy is served before sending payment.
Then, on the next business day, it must turn over the taxpayer’s money.
The Internal Revenue Service gives the taxpayer 21 days to contact the Service and work out an agreeable plan to get the levy released.
It is critical that the taxpayer send or fax to IRS a current financial statement along with all documentation to start the process to get immediate release of the IRS bank levy notice.
If you can do this on the day you get the bank levy notice you can be eligible for immediate release of the bank levy notice.
Please Note – This financial statement is a form 433-F. That form must be completed and sent to the Internal Revenue Service. You can find this form on our website.
The Exact Process of getting a Immediate release of a IRS Bank Levy Notice
There is a very exact system to get immediate release of a IRS bank levy notice.
As a general rule, the Internal Revenue Service has sent out three or four tax notices or bills to the taxpayer or business who has not responded to the final notice.
That final notice describes the information regarding the seizure action that the IRS considered on your case.
In many cases because the taxpayers have moved and they have never received the final notices from the Internal Revenue Service. According to the Internal Revenue Service is the taxpayer’s responsibility to advise the service of any changes in addresses.
The next step is for the CADE2 computer system which is the IRS enforcement computer to systemically issue either a bank levy freeze or a wage garnishment notice to the taxpayers employer. No human hand ever touches the levy.
Before the Internal Revenue Service will release a bank levy freeze/notice or a wage garnishment the Internal Revenue Service will need a current financial statement to determine how to close the case within their system.
IRS will evaluate each taxpayer’s ability to pay after it receives a fully documented financial statement. The faster you get the financial information to the Internal Revenue Service the faster you will get the IRS bank levy notice release.
The IRS will then determine which of the three closing method best suits the taxpayer based on their current financial statement.
Once the taxpayer agrees to the closing method that the IRS suggests the agent working the case will send an immediate release of the bank levy freeze to the financial institution.
It should be known that the taxpayer has a right at any time to appeal the closing method that IRS suggests.
As a general rule the Internal Revenue Service will close the case one of three ways and Release the Levy
IRS may recommend that you should be eligible for:
1. economic tax hardship and place you into a currently not collectible file,
2. they may determine that you should be able to make current installment payments, or
3. they may decide that you are a suitable candidate for an offer in compromise.
Call us today to get immediate bank levy notice help.
IRS Bank Levy Notice Help – Jacksonville, Tampa, Orlando
by Fresh Start Tax | Aug 26, 2013 | Expatriate Tax, FBAR
We are a tax specialty firm that deals with Non-Residents Tax Issues
An alien is any individual who is not a U.S. citizen or U.S. national.
A nonresident alien is an alien who has not passed the green card test or the substantial presence test.
Who Must File
If you are any of the following, you must file a return:
- A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year. You must file even if:
- Your income did not come from a trade or business conducted in the United States,
- You have no income from U.S. sources, or
- Your income is exempt from income tax.
However, if your only U.S. source income is wages in an amount less than the personal exemption amount (see Publication 501), you are not required to file.
A nonresident alien individual not engaged in a trade or business in the United States with U.S. income on which the tax liability was not satisfied by the withholding of tax at the source.
- A representative or agent responsible for filing the return of an individual described in (1) or (2),
- A fiduciary for a nonresident alien estate or trust, or
- A resident or domestic fiduciary, or other person, charged with the care of the person or property of a nonresident individual may be required to file an income tax return for that individual and pay the tax (Refer to Treas. Reg. 1.6012-3(b)).
NOTE:
If you were a nonresident alien student, teacher, or trainee who was temporarily present in the United States on an “F,””J,””M,” or “Q” visa, you are considered engaged in a trade or business in the United States.
You must file Form 1040NR (or Form 1040NR-EZ) only if you have income that is subject to tax, such as wages, tips, scholarship and fellowship grants, dividends, etc. Refer to Foreign Students and Scholars for more information.
Claiming a Refund or Benefit
You must also file an income tax return if you want to:
- Claim a refund of over withheld or overpaid tax, or
- Claim the benefit of any deductions or credits. For example, if you have no U.S. business activities but have income from real property that you choose to treat as effectively connected income, you must timely file a true and accurate return to take any allowable deductions against that income.
Which Income to Report
A nonresident alien’s income that is subject to U.S. income tax must generally be divided into two categories:
- Income that is Effectively Connected with a trade or business in the United States
- U.S. source income that is Fixed, Determinable, Annual, or Periodical (FDAP)
Effectively Connected Income, after allowable deductions, is taxed at graduated rates. These are the same rates that apply to U.S. citizens and residents.
FDAP income generally consists of passive investment income; however, in theory, it could consist of almost any sort of income. FDAP income is taxed at a flat 30 percent (or lower treaty rate) and no deductions are allowed against such income.
Effectively Connected Income should be reported on page one of Form 1040NR. FDAP income should be reported on page four of Form 1040NR.
Which Form to File
Nonresident aliens who are required to file an income tax return must use:
- Form 1040NR-EZ (PDF) if qualified. Refer to the Instructions for Form 1040NR-EZ to determine if you qualify.
- Find more information at Which Form to File.
When and Where To File
If you are an employee or self-employed person and you receive wages or non-employee compensation subject to U.S. income tax withholding, or you have an office or place of business in the United States, you must generally file by the 15th day of the 4th month after your tax year ends.
For a person filing using a calendar year this is generally April 15.
If you are not an employee or self-employed person who receives wages or non-employee compensation subject to U.S. income tax withholding, or if you do not have an office or place of business in the United States, you must file by the 15th day of the 6th month after your tax year ends.
For a person filing using a calendar year this is generally June 15.
File Form 1040NR-EZ and Form 1040NR at the address shown in the instructions for Form 1040NR-EZ and 1040NR.
Extension of time to file
If you cannot file your return by the due date, you should file Form 4868 (PDF) to request an automatic extension of time to file. You must file Form 4868 by the regular due date of the return.
You Could Lose Your Deductions and Credits
To get the benefit of any allowable deductions or credits, you must timely file a true and accurate income tax return. For this purpose, a return is timely if it is filed within 16 months of the due date just discussed.
The Internal Revenue Service has the right to deny deductions and credits on tax returns filed more than 16 months after the due dates of the returns. Refer to When To File in Chapter 7 of Publication 519, U.S. Tax Guide for Aliens (PDF) for additional details.
Departing Alien.
Non-Resident Alien Tax Help – Tax Attorneys, CPA’s – Experts
Please Note ; Before leaving the United States, all aliens (with certain exceptions) must obtain a certificate of compliance.
This document, also popularly known as the sailing permit or departure permit, must be secured from the IRS before leaving the U.S.
You will receive a sailing or departure permit after filing a Form 1040-C (PDF) or Form 2063 (PDF).
Even if you have left the United States and filed a Form 1040-C, U.S. Departing Alien Income Tax Return (PDF), on departure, you still must file an annual U.S. income tax return.
If you are married and both you and your spouse are required to file, you must each file a separate return, unless one of the spouses is a U.S. citizen or a resident alien, in which case the departing alien could file a joint return with his or her spouse (Refer to Nonresident Spouse Treated as a Resident).
Non-Resident Alien Tax Help – Tax Attorneys, CPA’s – Experts
by Fresh Start Tax | Aug 26, 2013 | Expatriate Tax, FBAR
IRS Opens Online FATCA Registration System
The Internal Revenue Service today has opening of a new online registration system for financial institutions that need to register with the IRS under the Foreign Account Tax Compliance Act (FATCA).
Financial institutions
Financial institutions that must register with the IRS to meet their FATCA obligations can now begin the process of registering by creating an account and providing required information.
Financial institutions will also be able to provide required information for their branches of operation and other members of their expanded affiliate groups in which the financial institution is the lead organization.
The registration system, designed to enable secure account management, is a web-based application with around-the-clock availability.
Within a secure environment, the new registration system enables financial institutions to:
1. establish online accounts;
2. customize home pages to manage accounts;
3. designate points of contact to handle registrations;
4. oversee member and/or branch information; and
5. receive automatic notifications of status changes.
Financial institutions are encouraged to become familiar with the system, create their online accounts and begin submitting their information.
Starting in January 2014
Starting in January 2014, financial institutions will be expected to finalize their registration information by logging into their accounts, making any necessary changes and submitting the information as final.
As registrations are finalized and approved in 2014, registering financial institutions will receive a notice of registration acceptance and will be issued a global intermediary identification number.
The IRS will electronically post the first IRS Foreign Financial Institution
The IRS will electronically post the first IRS Foreign Financial Institution (FFI) List in June 2014, and will update the list monthly.
To ensure inclusion in the June 2014 IRS FFI List, financial institutions will need to finalize their registrations by April 25, 2014.
If you need help with any foreign bank account issues are matters called professional staff today.
FATCA Registration System – Help with Foreign Tax Issues
