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Recent Evasion questions

I have a client who recieved a letter from a State tax

I have a client who recieved a letter from a State tax authority showing they had a bill for 2012. They had left the state in 2012 and never filed a return for that year. I got a copy of their IRS transcripts, and discovered they had unreported 2012 federal income of about 30,000 dollars. This was not intentional on their part. They apparently never got a 1099 that the IRS got. Now, the state is threatening levy, no return was filed, and State has the the 1099 income record. And it file the state return, I have to attach federal return. I have done the correct state return, and amended the federal returnn to do so, and told the client about the debt they now have. The returns have not been filed. The client is unhappy and does not think they owe the money. They do not think they got the 1099 income reported. This seems rather unlikely. I think they would like to avoid amending their 2012 federal return. I just assumed amending would be correct and the safest thing for my client. I suppose they could pay the state amount if it is calculated for them without filing a return (which is inflated as it was not all state income) and cross their fingers that the IRS never notices. Maybe I am too honest, but I just assumed they would amend and pay the correct federal figure. If they do not, what are the likely consequences? The IRS transcripts show they made more money then they reported. IRS has done NOTHING about it .... YET. Have they already gotten away with it? Or is IRS likely to find out. If found out at a later date? Are extra penalties for fraud possible? As the income was not reported, there is no statute of limitations running, so the IRS could find out about this at any time and come after them, correct? Am I being too hard on my client, in wanting ot amend the federal return? Or is this very much in their best interest, when is all is considered?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,772 satisfied customers
Please read the situation in full before offering a response

Please read the situation in full before offering a response because the details are important.I've been reporting as a dependent on my tax report with no income while in my 20s up until last tax year. I do, however, have a pretty significant income that has grown over time as my business venture (not registered or licensed) has become stable. I was unsure that I could support myself until this time, which is why I've reported as a dependent. Now, I'm ready to register my business with the county and license it and begin reporting my income, but I'm faced with the realization that I've been spending a lot, both in cash and with my bank account in a way that could be uncovered if I was ever audited by the IRS. I fear prosecution for tax evasion by the IRS. I want to alleviate my fear by very thoroughly correcting the mistakes I've made. How do I go about paying the IRS and reporting past income, because I presume that this is what I need to do. If my presumption is wrong, please correct me.My question, in a nutshell, how do make this right and legal? What does the process look like in full? Please list all of the steps. Thank you.

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emc011075

Tax advisor and Enrolled Agent

Bachelor's Degree

4,230 satisfied customers
QUESTION FOR JD, LANE--PLEASE HOLD FOR HIM Some months ago I

QUESTION FOR JD, LANE--PLEASE HOLD FOR HIMSome months ago I had a series of questions about a gentleman in California who had millions in trusts and also had been given un-collectible status. You did a great job on answering my questions.My client now has been assigned a RO (Revenue Officer) . Client reported he was renting and his rental address. RO found in TRW report that he was paying on a mortgage at that location. Client had reported he did not own. RO did a property search and found he is a possible owner for that and another property. The RO asked for documents to support his statement that he was renting and did not own. If such documentation is not received by Sep 10, the RO will summons mortgage companies for information and will being the process of levying his bank account. This is from RO letter that she faxed me a copy of.I have been handling this cycle under the mentorship of a consulting EA who I have been paying to consult and who was a RO herself for many years overseeing large collections like this. My mentor suggest I do a courthouse records check. How do I do one?It is my view that if he really owns these properties personally, the value of these properties is probably forfeit. They are levyable. Do you agree with this summation?My mentor immediately distanced herself from this cycle,"Circular 230 prohibits you from speaking with someone other than your Form 2848 client in regards ***** ***** tax issues.I personally would not/will not Rep someone who has willfully withheld pertinent information from me let alone from the IRS. This appears to be the case. therefore I am respectfully ***** ***** assist with this case moving forward."I do not know of anything in circular 230 that prohibits me from asking assistance of a fellow EA in my employ. I do hold a 2848 POA. My mentor had no resistance to assisting me before. I also have authority to add a representative on 2848, as I put it there when the client signed. That being said-- Is there some real prohibition on me asking a fellow EA for advice or consultation, even if they are not repping the client???? ...,Is it wrong for me to ask an EA more experienced in this areas for advice? Is this really a circular 230 violation?To me, my mentor does not want to have anything to do with this client, and is distancing herself. Do you think it would be wise for me to emulate her and terminate my relationship with client? ....If I am honestly trying to help my client and am honest, am I putting myself at risk by dealing with a possibly sleazy client? I have been scrupulously honest so far.My thought is I should find out from client first if he really owns these properties, or if they are trust assets. Do you agree?If he says he does not own them, he needs to provide proof. I should also do a search of courthouse records. Do you agree?If he DOES own them personally, what would you recommend?I can continue to rep him and insist e comes clean with everything and meet all requirements set forth by RO.OR I can tell him he needs to do that, but I am no longer repping him as he withheld data from me and IRS.What are your thoughts/reocmmendations on this?

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,772 satisfied customers
I set up a irrevocable living trust, funded it with tax free

i set up a irrevocable living trust, funded it with tax free munis, question do i have to pick up the interest from the trust, tax free interest, on my personal 1040 .... for AGI purposes for medicare payment amount.... or is this tax free interest just that tax free reflected on a 1041 sch B and thats it

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PDtax

Owner

Master's Degree

7,000 satisfied customers
Darren here. I have some $1300 stuck in a dependent care FSA

Hi Pearl, Darren here. I have some $1300 stuck in a dependent care FSA because I contributed not knowing the cut off age for dependent care expenses was age 13. My daughter is 14 now. Anything I can do to recover the funds?JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?Customer: I think that's it.JA: OK got it. Last thing - Accountants generally expect a deposit of about $38 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,772 satisfied customers
In what country can the citizens have foreign bank accounts

in what country can the citizens have foreign bank accounts and not have to report it to their country or pay taxes on it, like it used to be with swiss bank accounts. Is there such a country anymore? If so, I want to become a citizen there. If there are several countries that have safe banks and do not require their citizens to report their foriegn bank accounts, (not income, just large bank accounts), or just one, could you give me the list. There is no infomation on it online.....what a surprise..

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Robin D.

Vocational, Technical or Trade School

21,226 satisfied customers
I have a tax bill in the amount of 100k after an audit for

Hi I have a tax bill in the amount of 100k after an audit for 2013. I filed chapter 7 in 2014, but this came back after filing was complete. What shall I do?

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Barbara

Enrolled Agent, Paralegal

5,154 satisfied customers
We missed the deadline S-Corp extension, and we haven't

We missed the deadline for our S-Corp extension, and we haven't filed our taxes for 2015 what are our options?JA: The Accountant will know how to help. Please tell me more, so we can help you best.Customer: I didn't know the deadline for the extension was March 15thJA: Is there anything else important you think the Accountant should know?Customer: this is the first year filing taxes for our S-CorpJA: OK. Got it. I'm sending you to a secure page on JustAnswer so you can place the $5 fully-refundable deposit now. While you're filling out that form, I'll tell the Accountant about your situation and then connect you two.

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,772 satisfied customers
I made a mistake in my personal taxes i put a schedule c in

i made a mistake in my personal taxes i put a schedule c in my declaration reporting car miles expenses, i received a letter audit from the IRS asking for information form schedule c 11652 , schedule c-4 and schedule c-5. i dont have way to proove those expenses so my only solution is to pay using a payment plan.if i ignore the letter what will they do: send me a bill with the value i owe?or is better to file an amendment?how and when i can request a payment plan?im very confuse, thanks

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Lane

JD, MBA, CFP, CRPS

Doctoral Degree

17,772 satisfied customers
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