Happy Friday everyone, time for another tax news round up for the week!

The big tax news story of the week is the IRS crackdown on tax fraud. So scammers be warned, think you can steal from the IRS by filing false tax returns and identify theft? Think again:

IRS cracks down on fraud as tax return season begins
105 people were charged this week with fraud and identity theft for filing false returns (in an attempt to obtain refunds). To kick off the tax season, the feds are conducting an extensive sweep to find and stop tax scammers and identify theft.

In other tax news, the IRS shakedown on overseas bank accounts continues. The IRS won an agreement several years ago that has given them an unprecedented amount of information on account holders at Swiss bank UBS. As the latest IRS crackdown on the use of offshore bank accounts proves, no one is safe from the wrath of the IRS – who is more determined than ever to investigate high-net-worth individuals, both at home and overseas.

Three UBS Clients Accused of Hiding Offshore Money From IRS
Three ex-UBS AG clients were indicted on charges of hiding millions of dollars in assets from U.S. tax authorities through the use of secret offshore accounts.

Feds indict Swiss bank Wegelin claiming it helped US taxpayers cheat IRS out of $1.2 billion
In the war on tax cheats, Switzerland’s oldest private bank has been indicted by The U.S. Justice Department.

Now that we are in tax filing season, beware of these “audit flags” (we call them red flags) on your tax returns!

12 IRS audit flags for 2012
“You may be one of the unlucky two percent of taxpayers who are subjected to random audits, but most IRS inquiries arise for specific reasons. Here are the 12 audit flags for 2012. Remember, many of these are legitimate — just make sure that you have all supporting documentation in case the IRS calls.”

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With tax season fast approaching, those who need IRS tax relief are encouraged to examine the qualifications of tax resolution specialists before they hire help. Searching the Better Business Bureau’s (BBB) TrustLink Reviews is a great resource for such an investigation. Every year, the BBB receives feedback from people suffering from IRS debt.

TrustLink reviews include comments from consumers acknowledging their experiences, good and bad. Tax Resolution Services, Co. (TRS) holds TrustLink reviews in high esteem and are proud to be one of the tax resolution firms with the MOST reviews and one of the highest ratings.  Over the years, we have secured the the most credible firm with the most credible results reputation.  See our rating: http://bit.ly/xmiwq2

What helps to distinguish TRS from other firms are the following:

• An accredited member of the Better Business Bureau since 1998.
• A National Certified Tax Relief Firm with one of the Highest BBB Ratings in our field.
• Certified Tax Resolution Specialists as certified by the American Society of Tax Problem Solvers (ASTPS).
• Hundreds of reviews

Because the IRS holds you personally responsible for all the information you provide them, it is imperative you do your homework and make sure the person or firm you are entrusting your finances with is credible – don’t be fooled by slick ads that seem too good to be true, because they usually are.

Below are two websites that are easy to use and help you make an informed choice: BBB and Google.

BBB TrustLink Reviews

• Check out a potential tax attorney or tax resolution specialist/firm on the Better Business Bureau’s website: bbb.org. Typically, the BBB only tracks complaints and not resolutions but company responses to the complaint are often posted so you can see how disputes are handled.
• Make sure to note the grade rating (example: B+), read all the BBB analysis and then read the Trust Link reviews for this company.

Trust Link reviews will give helpful feedback from previous client experiences and after reading them, you should get an idea of the service and satisfaction the company provides.

Google Search

• Google the founder’s name and check his/her credentials.  You need to know who’s running the business you are about to employ.
• Google the company name with the words “complaint,” “rip-off” and “scam.”
• Google your state’s bar (if there are tax attorneys) and check for complaints.
• Google all their professional trade affiliations and associations including ASTPS and check current status.
• Google Facebook, LinkedIn, and Twitter to examine their social media posting activity. The more reputable the company, the more timely information is posted. The benefit is that you will be able to see both the good and bad comments.

Now that you have more information, you can feel confident about contacting the tax resolution firm worthy of your business and make an appointment for a free consultation.  You will be able to articulate details, ask relevant questions and be relieved to know your IRS tax issues are in the hands of certified tax resolution specialists giving expert guidance and beneficial results.

Related posts:

1. Settling IRS Tax Debt: What Taxpayers Don’t Know About Tax Resolution Could Hurt Them
2. What the IRS May Not Tell You About Payment Plans
3. Frequently Asked Questions about IRS Payment Plans

Michael Reiss, New Jersey doctor, professor and medical researcher, was sentenced on January 11, 2012 for failing to report his offshore (UBS) bank accounts. According to the IRS, Reiss was sentenced to eight months in a community confinement center for failing to file Reports of Foreign Bank and Financial Accounts (FBAR) with the IRS. Reiss pleaded guilty in August 2011 and agreed to pay back taxes of at least $400,000 and to pay a civil penalty of over $1.2 million.

Dr. Reiss had opportunities but made no attempt to enter either the IRS Voluntary Disclosure Program (OVDP) that began in 2009, or the following program that recently closed in September 2011. These voluntary programs were designed for people like Reiss; U.S. taxpayers who may have undisclosed assets or income offshore. The program’s objectives were to bring taxpayers into compliance with the U.S. tax system, have them pay an IRS penalty, and by coming forward voluntarily, non-compliant taxpayers avoided the same criminal prosecution and stiff penalties facing Dr. Reiss.

It is always in taxpayer’s best interest to come forward from behind the shadows for IRS debt relief. Recent figures show the disclosure programs’ success thus far. The IRS has now collected an estimated:

• $2.7  billion in tax revenues as a result of the 2009 and 2011 Offshore Voluntary Disclosure Initiative.
• $2.2 billion has been collected by people who participated in the 2009 program, and the IRS is starting to work through the 2011 applications ($500 million in payments so far from the 2011 program).

For Reiss, purposely failing to report his accounts, made his IRS tax issues not only more complicated but also more expensive. According to the sentencing memos, Reiss was apparently aware of his obligation to file a Report of Foreign Bank Account (FBAR) as he had done so for other offshore accounts. However, he did not attempt FBAR filings for the Swiss accounts. This willful behavior exhibited by Reiss (and quite possibly his financial advisor) has him facing criminal charges that will no doubt have a major negative impact on his net worth. He will be responsible to pay the original income tax amount, plus severe penalties, interest for his failure to file and pay the taxes, as well as pay the 50% FBAR penalty. Being locked up for eight months will only exacerbate the financial devastation Dr. Reiss will most likely endure.

The latest IRS enforcement strategy proves, no one is safe from the wrath of the IRS. They are more determined than ever to go after wealthy individuals, both at home and overseas. If you still have undeclared funds in offshore bank accounts and owe back taxes, being proactive to disclose them to the IRS could help reduce your chances of criminal prosecution. You are encouraged to hire a certified tax resolution specialist or tax attorney to handle your case, to take over all IRS communications, bring you into FBAR compliance, minimize severe IRS penalties and work out a structured IRS payment plan that brings you out in the open and away from the shadows.

Related posts:

1. Offshore Tax Evaders Get Preferred IRS Help
2. IRS Tax Relief News: Tax Case Convictions on the Rise For Americans with IRS Problems
3. Tax Shelters Spring a Leak-Offshore Tax Evaders Take Note

With tax day just around the corner, many taxpayers will soon scramble to get their documents organized in order to take full advantage of all the tax breaks available to them. Of these taxpayers, homeowners have a lot to gain but to getting the tax help they need, will mean preparing the dreaded and often confusing itemized deductions.  A Fox Business Article entitled Six Tax Breaks Every Homeowner Should Know suggests that homeowners look past the complex IRS deductions and take full advantage of all the tax breaks they can. Homeowner tax deductions are financially smart and likely result in more money the taxpayer gets to keep.

Here are the six most important tax breaks a homeowner should not miss out on:

Mortgage Interest Deduction

Most homeowners take this deduction, because it offers provides the most tax relief and significant savings. The majority of monthly mortgage payments go toward loan interest, so you are able to deduct all the interest paid on your taxes. Homeowners are advised to keep Form 1098 issued from the lender close by as it explains exactly how much can be deducted and provides proof should there be an IRS audit.

Mortgage Insurance Premiums

Many homeowners have private mortgage insurance (PMI) which protects the lender from default on the loan. If you have more than 20% equity in your home, you are not required to have PMI. If you have reached the 20% or more equity mark and your adjusted gross income (AGI) is less than $100,000 (or $50,000, if married filing separately), you could be entitled to take a deduction on the amount you paid. The deduction is either reduced or eliminated if your income level surpasses that and goes away altogether if the AGI is $109,000 or more ($54,500, if married filing separately).

Energy Star

Homeowners can take advantage of tax breaks that benefit the installation of energy efficient doors, windows and skylights. To qualify for the deduction, the following criteria must be met:

• Deductions must be taken by the end of the year.
• It must pertain to a primary residence.
• They must follow Energy Star program requirements.

If qualified, a homeowner could receive a tax credit equal to 10% of the cost of the products. Deduction limits for the products are capped; doors at $500, windows and skylights at $200 but installation costs are not deductible. Since IRS rules for documentation are vague, it is wise to keep any receipts and Energy Star documentation for any and all qualified improvements.

Points

The IRS defines points as certain charges paid to obtain a home mortgage. Points are prepaid interest and may be deductible as home mortgage interest, if deductions are itemized. If this is your first mortgage you can deduct them in the year they were paid, making sure they are for your primary residence and you didn’t pay excessive points. If you have refinanced, you are able to deduct points over the life of the loan. A certified tax professional or CPA will be able to assist you with the details if you qualify.

Property Taxes

Based on the assessed value of the real property, you are allowed to deduct state and local property taxes. If your property taxes are paid out-of-pocket, you will need to use previous property tax bills to determine how much you have paid. If you are one of the homeowners who pays through an escrow account, the information appears on Form 1098.

Construction Loan Interest

If you have taken out a construction loan specific to building a home, you may be entitled to deduct the interest. However, the deduction only lasts for the first 24 months of the loan, even if the construction carries on for a longer period of time.

If trying to figure homeowner tax deductions on your own, you will most likely encounter technical restrictions and confusing guidelines. It’s best to consult a tax expert who may be able find more deductions than you are aware of. More importantly, they can help you avoid creating any IRS tax issues in the first place.

Related posts:

1. Tax Advocate Warns Taxpayers Rights at Risk
2. Doctor Sentenced for Failing to File FBAR Reports
3. Tax Resolution Tip: Selecting the Right Tax Help Service

A businessman in Naugatuck, Conn., was sentenced to two years of probation for underpaying his federal income taxes.

According to court records, Augustine C. Ofili, 54, was the owner of Augustine Insurance Agency in Bridgeport.  From 2004 to 2007, Ofili underreported on his federal income tax returns the insurance commission income he received from his insurance business.  Ofili also failed to report capital gains from the sale of real estate in 2006 and 2007, and wrongly claimed real estate losses in 2007.  As a result, for the 2004 through 2007 tax years, Ofili underpaid his taxes in the total amount of $47,964.

Ofili is required to pay back taxes, as well as applicable penalties and interest.

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A Dora, Ala., woman has been charged with tax fraud for her role at a medical clinic she managed and partly owned. Carol Twilley, 43, allegedly failed to account for and pay to the IRS the federal income taxes withheld and Federal Insurance Contributions Act taxes due to the United States on behalf of Horse Creek Family Medicine Inc. and its employees from November 2004 to January 2006. She faces up to five years in prison on each of the six tax fraud counts.

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Shenita Nicole James, 33, of Montgomery, Ala., pleaded guilty to preparing and filing false and fraudulent federal income tax returns. James was employed as an office manager and income tax preparer at We Finance Auto Sales in Montgomery in 2008 and 2009. We Finance Auto Sales prepared income tax returns for individuals who could choose to use their tax refunds to purchase or make down payments for automobiles.

On or about Feb. 3, 2009, James prepared and filed an individual income tax return for an individual identified as J.W. for the calendar year 2008. James put on this fraudulent return that J.W. earned $13,444 in household help income, that J.W. was entitled to a first-time home buyer credit of $7,500, and that J.W. was entitled to an earned income credit in the amount of $4,824.

This fraudulent return generated a refund to J.W. of $13,666. James filed this return despite the fact that she knew that J.W. did not earn that amount of household help income, was not entitled to a first-time home buyer credit, was not entitled to said earned income credit, and was not entitled to the refund in the claimed amount.

She faces up to three years in prison and a fine of up to $250,000.

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Its Friday, and that means time for my weekly tax news round up. Here’s a look at some of the IRS and tax related stories that caught my eye this week.

Lets begin with one of my favorite topics: Avoiding an IRS Audit.

Being audited by the IRS is no laughing matter and I want to help taxpayers avoid it whenever possible. I was very happy to be quoted in How to Avoid an IRS Audit in US News World and Report. I also shared my tips on avoiding an IRS Audit in the Big Biz Show Blog, 5 Tax Return “Red Flags” that Could Trigger an IRS Audit.

Now that tax season is here, many of us will be searching for tax filing advice to avoid headaches on tax day. I recommend bookmarking 10 common tax mistakes to avoid on CBS Money watch and following those tips carefully.

Barack Obama’s State of the Union address combined with the Mitt Romney tax returns reignited an ongoing debate this week about our current tax code and raising taxes on the wealthiest 2% in an effort to reduce our country’s overwhelming debt.  I enjoyed reading this recap on Forbes, Taxes and the State of the Union by  Kelly Phillips Erb.

Perhaps Washington needs to examine their own employees first.   In the Washington Post article, Amid calls for tax fairness, government report shows federal workers owe $3.4B in back taxes, IRS data shows more than 279,000 federal employees (some of them working for the Senate and House of Representatives) collectively owe $3.4 billion in back income taxes as of Sept. 30, 2010. Hmmmmm.

There it is, my weekly round-up, I hope you will let me know which tax stories caught your attention this week!

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Parents of children and those with dependents should keep in mind the tax relief benefits and deductions available to them this tax season. The IRS has issued a brief reminder to all parents to keep these tax relief tips in mind as they file their 2011 taxes:

• Dependents: You can start claiming a child as a dependent the year they are born, so if you gave birth to little bundle in 2011 you can start claiming on your next return (See more information on IRS Publication 501).
• Child Tax Credit: Parents with children under age 17 can take this credit (See more info on IRS publication 972).
• Adoption Credit: If you have adopted a child you may be able to take a tax credit for certain expenses paid during the adoption process of an eligible child (See more information on IRS form 8839).
• Higher Education Credits: If your child is in college the education credit can help to offset the cost. The education credits can help reduce your federal income tax dollar-for-dollar (See IRS Publication 970 for more information).
• Self-Employed Health Insurance Deduction: If you were paying for health insurance coverage for your child under age 27 while self-employed you may be able to deduct any premiums you paid. (For more information visit IRS.gov)

If you are a parent or have dependents you can take advantage of tax relief deductions by staying up to date on tax news. The IRS website at irs.gov is full of incredibly helpful tax tips and news to keep you out of IRS tax problems and away from back taxes.

Related posts:

1. Tax Relief Deductions Due to Inflation for 2012
2. Tax Help: How to Resolve Your Back Taxes & Prevent Tax Problems If You’re Short on Cash This Season
3. Tax Resolution Scams on the Rise: How to Avoid Tax Settlement and IRS Debt Relief Scams

The IRS is issuing information to all taxpayers to stay on the lookout for fraudulent emails and correspondences claiming to be the IRS this tax season. Each year the IRS receives thousands of reports about suspicious calls, emails, faxes and notices claiming to be from the IRS. The goal of these fraudulent notices is an attempt to collect your personal information for identity theft or to take your money!

The IRS is sharing tips on how to avoid problems with these IRS cyber scams and internet phishing on their website. You can read some tips below:

• Know that the IRS never asks for personal and financial information like PIN numbers or credit card access information.
• The IRS does not initiate contact with taxpayers via email to request personal information.
• Never reply to an email sent by someone claiming to be from the IRS.
• Never open any links or attachments from emails sent from someone claiming to be the IRS.
• Help report the scams to prevent others from being victims of tax fraud at www.irs.gov.

To learn more about IRS tax scams go to the Suspicious e-Mails and Identity Theft page on the IRS website. And remember, to keep yourself out of tax trouble make sure you use a certified tax relief professional to help with your filing needs this tax season.

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