On January 1 of each year, the Internal Revenue Service (IRS) makes various changes to the Internal Revenue Code and therefore to the laws governing how we calculate federal income tax returns.  This means that you as the taxpayer must be familiar with these changes if you are preparing your tax return yourself, or if you are using a trained tax professional to complete and file your tax return, being sure he tax professional is familiar with the changes to the tax laws.  The primary reason the IRS is making the changes in the tax laws for 2012 is to adjust for inflation.  Therefore, in general, if you earn the same amount of money in 2012 as you earned in 2011, you will pay slightly less tax in 2012 as compared to 2011.

Keep in mind that while these changes go into effect as of January 1, 2012, they will not impact your federal income tax return until the return you need to file by April 15, 2013.  The federal income tax return you need to file by April 15, 2012 is based on the tax laws that were in effect during the 2011 calendar year.

Without further delay, here are the most important changes for the 2012 tax year.

Increase in personal exemptions. The personal exemption amount has been increased $100 to $3,800.

Increase in standard deductions. The standard deduction has increased different amounts depending on the filing status used by the taxpayer, with the increases as follows:

• For married filing jointly, up $300 to $11,900
• For singles/married filing separately, up $150 to $5,950
• For head of household, up $200 to $8,700

Increase in tax bracket thresholds. The amount of money separating each tax bracket has increased, so you must earn more money before you move into a higher tax bracket as compared to 2011.

Increase in medical savings deductible. The annual deductible amount for Medical Spending Accounts (MSAs) has increased by various amounts depending on if you are an individual or a family.  The MSA is money that can be set aside pre-tax to spend on medical expenses.

Increase in student loan deduction phase out level. Up to $2,500 in interest paid on student loans may still be deducted, but the income level when this deduction is phased out has increased by $5,000.  The phase out not begins at $125,000 and phases out completely at $155,000.

Increase in estate tax exclusion. The amount left behind upon someone’s death, known as their estate, is not taxed unless it exceeds $5,120,000, which is up $120,000 from the 2011 amount.

How can I get help from a tax attorney in calculating my income tax?

If you need help from an attorney, please complete the short form below and a tax attorney can contact you to discuss your situation.  A tax attorney can start discussing your situation at any point during the year, but the earlier in the year you involve a tax attorney, the sooner you can take steps to keep documentation that will help to better file your tax return.

Keep in mind that the initial consultation with a tax attorney is free of charge, completely confidential, and does not obligate you to anything further.  Therefore, please take this opportunity to start getting help in completing your tax return correctly based on the updated tax laws.

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As part of the ongoing investigation of the sexual-abuse scandal related to Jerry Sandusky and Penn State University, it has come to light that Joe Paterno sold his ownership in his home to his wife Susan Paterno for $1 on July 21, 2011.  Although Mr. Paterno is not being investigated or pursued (at this time) for criminal charges related to the Sandusky investigation, there is a great deal of uncertainty as to how much Mr. Paterno and other officials with Penn State knew about Sandusky’s alleged illegal activities and if Mr. Paterno and others should have done more to stop Sandusky.  Many legal experts believe that Mr. Paterno will likely face a civil suit from the families of the victims for failing to take action to protect the victims from the alleged sexual abuse.

Given the timing of when Mr. Paterno sold his home to his wife, it has been theorized that the sale was an attempt to shield Mr. Paterno’s home in the event a civil suit is filed against him.  Specifically, Lawrence Frolik, a law professor with the University of Pittsburgh, indicated the transfer looks “like an attempt to avoid personal liability in having assets in his wife’s name.”  If a civil suit is brought against Mr. Paterno and it is proven that the transfer was purely for the purpose of shielding his home from the lawsuit, then the court can reverse the sale and make it available in the event the plaintiffs win the civil suit.

However, Mr. Paterno’s attorney Wick Soellers has claimed from the start that the transfer of the home to Ms. Paterno was for estate tax planning purposes and not to shield the home from a civil lawsuit.  While the estate tax planning position was generally dismissed initially because of comments such as the one noted above from Mr. Frolik, after further investigation, it does appear that the estate tax planning position does have merit for two reasons.

First, under Pennsylvania law, when a husband and wife buy a home together, they are each considered to own 100% of the property.  If a civil suit is brought against one spouse, such a property that is jointly owned is not an asset made available should the plaintiff win the civil suit, as it would violate the rights and ownership in the property of the other spouse.

Mr. Paterno’s home was owned jointly by Mr. and Mrs. Paterno.  Therefore, under the law noted above, the Paterno’s home was already completely protected from any civil suit that could be brought against Mr. Paterno.  Only in the event that a civil suit were brought against both Mr. and Mrs. Paterno would the home be potentially included in a payout should the suit be lost by them.

Second, the estate tax laws for the state of Pennsylvania are currently set to change.  At present, when someone dies and leaves an estate, the first $5 million in assets are exempt from estate tax and any assets above that amount are subject to taxation at the rate of 35%.  As of January 1, 2013, the exempt amount drops to $1 million and the tax rate for anything above this exemption level rises to 55%.

Therefore, assuming Ms. Paterno does not have assets worth $5 million already, it is a smart estate tax planning move to transfer their home (which is worth approximately $600,000) into her name before this exemption level drops.  Such a transfer is completely legal and is recommended by estate tax planning attorneys with clients who have sufficient assets to be impacted by these thresholds.

Given the facts that are now available related to the tax laws in the state of Pennsylvania and the ownership of the Paterno’s home, it does appear that the sales of Mr. Paterno’s home was for estate tax planning purposes rather than to shield the home from a civil suit.

What if I have questions about estate tax planning or other tax topics?

If you need help from a tax attorney, you can complete the short form below and a tax attorney will contact you to review your situation.  This review is completely confidential, free of charge, and does not obligate you to anything further.  Therefore, please take this opportunity today to get the help you need with your tax questions.

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More than 200 million Americans file their federal income tax returns with the Internal Revenue Service (IRS) each year.  But what if you are not among that number?  What will the IRS do if you do not pay your tax liability, or for that matter, if you do not even file your tax return?

The Federal Government of the United States relies on the money paid through income taxes to function, as income taxes paid to the IRS account for funding approximately half of the annual budget of the United States.  Because of the heavy reliance the government places on receiving income taxes, the IRS takes the nonpayment of taxes very seriously.

The IRS starts addressing the nonpayment of tax by assessing a penalty and interest against the tax liability owed.  This is especially true for those who do not file their federal income taxes.  When you do not file your federal income tax, the IRS begins to assess against you a failure to file (FTF) penalty.  The FTF penalty is assessed at the rate of 5% of the amount you owe per month.  For example, after the filing of your tax return is one month late, you will now owe your original tax liability plus an additional 5% of that amount; at the end of the second month, you will owe the original tax liability plus an additional 10%; and so on until the filing of your tax return is five months late at which time you will owe the original tax amount plus 25%.

If you file your federal income tax return but do not pay the tax you owe, the IRS begins to assess a failure to pay (FTP) penalty.  The FTP penalty is only .5% of the amount you owe per month, a much lower penalty.

Therefore, if you owe $1,000 in tax and choose not to file your return, five months later you will owe $1,250 plus interest; but if you file the return and do not pay your tax, five months later you will only owe $1,025 plus interest.

In addition to assessing penalties and interest against you, the IRS will begin to pursue you to collect the unpaid tax liability.  This process will begin with letters and other methods of contacting you to be sure you are aware that you have an unpaid tax liability.  But as time passes and the IRS continues to receive no payment or contact from you being willing to work out some form of payment arrangement, the IRS will escalate the matter, ultimately possibly filing criminal charges against you or obtaining a lien so they can begin to seize your personal property to satisfy the tax liability.

How can I get help with my unpaid federal income taxes or tax returns I have not even filed?

If you need help with a matter related to your federal income taxes, you need to speak with a tax attorney.  A tax attorney is an attorney who has attended law school specifically to learn about addressing tax matters.  Along with this training, such an attorney will have a great deal of experience in dealing with situations similar to yours.

Please complete the short form below, and a tax attorney can review your situation and get in touch with you to speak about the matter.  This initial consultation is free of charge, completely confidential, and does not obligate you to anything further.  Therefore, you have every reason to take advantage of this opportunity by submitting the form to get help with your tax matter today.

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Did you realize that there is a time limit as to how long a creditor can collect a debt that you owe to them?  Whether you owe the debt based on an oral or written agreement, a promissory note, or related to credit card charges, each debt has defined timeframes ranging from as short as 2 years to as long as 15 years that the creditor can collect the debt from you.  This timeframe is known as the statute of limitations.  A statute of limitation also exists for collecting tax debts at the federal level.

In general, the statute of limitation for tax debt owed to the Internal Revenue Service (IRS) is 10 years from the date when they send a bill to collect the amount owed.  This limitation also applies to a levy placed on your personal property.  This means that when the statute of limitations on the tax debt expires, any levy placed on your property related to that debt likewise expires.

However, there are several events that can lengthen the 10-year statute of limitations for collecting federal taxes due.  These events include the following:

Filing an offer in compromise. An offer in compromise is a proposal by a taxpayer for the IRS to accept less than the full amount owed but still consider the tax liability paid in full.  While the IRS is considering an offer in compromise, the statute of limitations on collecting your tax debt is not running.  The IRS can take up to two years to consider your offer.

Filing bankruptcy. Whether it is a Chapter 7 liquidation or a Chapter 13 reorganization, filing bankruptcy stops the clock on the statute of limitations for tax debt.

Signing an extension waiver. If you have signed other documentation with the IRS agreeing to remain liable for the unpaid tax debt beyond the 10-year statute of limitations, then the timeframe for collecting the debt may be indefinite depending on the wording of the waiver.

If you have unpaid tax debt that is approaching the statute of limitations, keep in mind that they IRS is aware of this timeframe as well.  You should expect that the IRS will escalate their collection attempts as the statute of limitation timeframe approaches.

Also, remember that the 10-year statute of limitations on collecting tax debt applies and other details noted above apply specifically to taxes owed at the federal level to the IRS.  If you owe tax to a state, you need to speak with an attorney to understand the statute of limitations, if any, on your specific tax owed.

How can I get help from a tax attorney with my tax matter?

By completing the short form found below, your information will be provided to a tax attorney who can assist with your matter.  This review will be based on your specific situation.  The review is free of charge, 100% confidential, and does not obligate you to anything further.

Remember that tax laws and the process of working with the IRS on tax matters can be complicated issues.  It is generally a good idea to have a trained tax professional in your corner who understands the way the IRS operates and can give you specific guidance.  Therefore, please take this opportunity to get help with your tax matter today.

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Filing your federal income tax with the Internal Revenue Service (IRS) can be a complicated process.  While a Certified Public Accountant (CPA) or other tax preparer can help you calculate and file your tax return, you would need the services of a tax attorney when you encounter some form of legal issue related to your taxes.  Legal issues can arise in a variety of situations related to your federal income tax, including but not limited to some of the following.

You cannot pay your federal income tax due. What happens if you calculate your federal income tax and find that you owe more than you can afford to pay?  The IRS offers options to allow a taxpayer to establish a payment plan or submit an offer in compromise, which is an offer to pay the IRS less than the full amount of tax due.  But the IRS expects you to pay your full tax liability owed; they do not accept a payment plan or an offer in compromise lightly.

To obtain a payment plan or offer in compromise, you must complete specific forms that include a valid reason and sufficient supporting documentation.  The IRS will want to explore with you fully that you have no other method available, such as selling an asset or taking out a loan, to obtain the funds needed to pay your full tax liability.  A tax attorney can help evaluate your tax situation to determine if you may be a candidate for an IRS payment plan or offer in compromise.  An attorney can also help you complete the necessary forms and pull together supporting documentation that is more likely to meet the IRS’ requirements for accepting your proposal.

You have not filed one or more tax returns. If you have not filed your federal income tax for one or more years, it can become a serious legal matter.  The IRS considers tax evasion a serious legal matter.  It is generally in your best interest to take steps to file all of your past due tax returns as soon as you can, because the IRS will file a substitution returns on your behalf that will likely require you to pay more taxes than you would owe on your actual return.  It is also wise to discuss your situation with a tax attorney as well, to be sure you are taking all the appropriate steps you can to minimize the seriousness of the issue.

You are being audited. If you are being audited by the IRS, depending on the nature of the audit, a CPA may be the appropriate person to help prepare additional documentation to support information on your tax return.  But if the audit results in you owing additional tax or uncovers other issues, a tax attorney may be able to help you negotiate a lower settlement for your debt or otherwise addressing the issues.

Subject to criminal tax investigation. In the event you commit some form of tax fraud or serious tax evasion, the IRS can file criminal charges against you.  Criminal charges are never a laughing matter and therefore are not something you should handle on your own without appropriate legal representation.  A tax attorney can help you address criminal charges related to your taxes.

How can I hire a tax attorney who can help with my situation?

If you complete the short form found below, a tax attorney can evaluate your specific situation and get in touch with you to provide an initial consultation free of charge.  This consultation is 100% confidential and does not obligate you to anything further.  But if you are interested in getting in touch with a tax attorney who can help you with your issues, please take this opportunity to complete the form today.

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When you calculate your federal income tax, it is not unusual to find that you owe money to the Internal Revenue Service (IRS).  Even though they have been taking tax out of your paycheck throughout the year, if the amount withheld was not enough, the amount you owe can be significant.  If you find that you cannot afford to pay the tax liability you owe and you are considering not filing your taxes or not working with the IRS to establish a payment plan, you should be aware that the IRS has powerful authority to collect the tax from you.

The IRS counts on the taxes it collects to fund the federal government.  Therefore, when taxpayers do not pay their fair share, the IRS considers it a serious matter.  The Internal Revenue Code grants the IRS broad powers to place a levy on the assets of a taxpayer who has not paid their taxes and is not willing to work with the IRS to make payments.  An IRS levy gives the IRS authority to seize your assets.

What assets you may be wondering?  Technically, any of your assets are subject to an IRS levy.  This includes your checking and savings accounts, jewelry, family heirlooms, and furniture.  If you are fortunate enough to have luxury items such as a vacation home, a boat, or an expensive sports car, they are fair game for the IRS to seize and sell.  Even your home and retirement accounts can be taken in extreme circumstances.

In the case of retirement accounts, it does not matter whether it is your Social Security benefit, an IRA, your 401k, or your pension.  If it has value, the IRS can seize it to use the funds to pay off your tax liability.

However, even though the IRS technically has the authority to seize any of these assets, it would prefer to establish a payment plan with the IRS.  The IRS will only resort to seizing your property after sending numerous warnings and finding that the taxpayer is avoiding paying the tax and is unwilling to work out a payment arrangement.  Even if the IRS has to seize your property, they will take other assets besides your home and retirement accounts if at all possible, as the IRS understands the difficulty the loss of a home or retirement accounts can cause in someone’s life.

If I foresee issues paying my tax liability, how can I get help?

A tax attorney can provide you help if you have a tax debt that you cannot afford to pay.  Tax attorneys have years of training and experience with situations similar to yours, so they will know what to expect when working with the IRS and can provide advice specific to your tax issues.

If you complete the short form below, a tax attorney will contact you to discuss your situation free of charge.  This initial consultation is completely confidential and does not obligate you to anything further.  But it can be the first step in getting relief from your tax burden, so please take the opportunity to get help today.

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White collar crime is a crime committed by a business professional that relates to their job.  Whereas many crimes, ranging from traffic violations to robbery to murder, are crimes that occur in general society, white collar crimes occur within a business.  White collar crimes are often attributable to the legitimate access and authority a person has as a part of their job, the person just chooses to use that access and authority to perform unauthorized and illegal acts.  White collar crimes are typically non-violent in nature.

Common examples of white collar crimes include but are not limited to the following:

Blackmail. Also known as extortion, this is forcing someone to do something by threatening to reveal certain information about that person to others or the general public.

Bribery. Giving someone money to have them do something illegal.

Computer fraud. Someone stealing information via a computer and selling that information for a profit.  This white collar crime is also commonly referred to as computer “hacking.”

Counterfeiting. This is creating an imitation version of something valuable and attempting to pass it off as the real things.  Countefeiting is most commonly associated with currency, but it can pertain to anything of value.

Embezzlement. Someone taking money or property that has been entrusted to them and using it to their benefit.

Perjury. Lying while under oath in a court of law or other judicial hearing.

While white collar crimes are generally considered crimes against a business, they can cause harm to individuals as well.  For example, if the executives within a public company are able to manipulate the financial statements of the company so that the company appears to be more profitable than it is in reality, when the fraud is discovered, it can result in a significant loss in stock value.  Anyone who has bought the stock of that company will lose money… money that those individuals may have been counting on as a part of their retirement.  This is exactly what happened with the Enron scandal, which was revealed ten year ago as of October 2011.  The  Enron scandal ultimately resulted in the bankruptcy of the entire company and led to the loss of the life savings of thousands of people who had invested in the company.

If I am being investigated or charged with a white collar crime, can a criminal defense attorney offer me help?

Yes, white collar crimes are considered a criminal offences and can result in a significant punishment, including a jail sentence, a large fine, and repaying the victims of the crime.  Therefore, if you are even being investigated for a white collar crime, you should seek help from a criminal defense attorney immediately.

If you complete the short form below, a criminal defense attorney will review your case free of charge and provide an initial consultation to you.  This review is completely confidential and does not obligate you to anything further.  Therefore, please take advantage of this opportunity while you can to have a criminal defense attorney review your situation.

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Can the IRS take my home because I owe unpaid taxes?

If you owe money to the Internal Revenue Service (IRS) related to your federal income taxes, it can become a very serious financial matter.  If you do not pay the money you owe, the IRS can seize your possessions, possibly including your home.  How can they do this?  Read on to find out more about the process, as before the IRS can seize your home (and for that matter is willing to take such a serious step), a number of things have to happen.

First, if you owe money to the IRS, the IRS will make every effort to be sure you are aware that you have an unpaid tax liability.  It is not unusual for there to be a simple misunderstanding on the part of a taxpayer, especially if it is the first time a taxpayer has ever had to pay taxes, they have not had to pay taxes in a long time, or the taxpayer filed an extension.  For example, a new taxpayer may simply not have known that they need to pay their tax liability at the time they file their taxes.  Or if the taxpayer has never filed an extension before, they may not have realize that the tax liability must still be paid on April 15.  When the unpaid tax liability is a simple misunderstanding, a notice to the taxpayer about the unpaid tax is often enough to illicit payment.

Second, if you do not respond to the IRS’ initial notification that there are unpaid taxes or to their follow-up communication, it will become apparent to the IRS that you are not willing to work with them in addressing the tax liability.  Usually when the IRS seizes the possessions of a taxpayer, it occurs in situations where the taxpayer is unwilling to work with the IRS to establish a payment plan or otherwise address the tax liability.

Third, the IRS will provide you a notice of their intent to place a levy against your property and then obtain that levy.  A levy allows the IRS to take your property to satisfy the tax debt.  This property can include your bank accounts, wages, vehicles, and other personal property, including your house.

The IRS is aware that seizing the home of a taxpayer can cause a significant hardship in the life of the taxpayer.  Therefore, they will not do so unless they have no other options.  This means the taxpayer has to willfully continue to not work with the IRS to establish a payment plan to pay the taxes and that other assets of the taxpayer are simply not sufficient to satisfy the tax debt.

As you can see, it takes a concerted effort on the part of a taxpayer to drive the IRS to seize their home.  So long as you file your taxes, even when you cannot afford to pay  them, and are willing to work with the IRS to agreed to a payment plan, you can avoid having your home seized by the IRS.

Should I speak with a tax attorney if I owe money to the IRS that I cannot afford to pay?

If you are not able to pay your tax liability to the IRS, it is a good idea to hire a tax attorney.  A tax attorney will have experience in working with the IRS to address unpaid tax liability.  They will be able to provide you guidance on your tax situation and what the best options are for you to address the deficiency.

If you complete the short form below, a tax attorney can review your situation free of charge and with complete confidentiality.  This review does not obligate you to anything further, yet it will provide you with an idea of what the best steps are for your situation.  Therefore, please take a few moments to complete the form to get the help you need to address your unpaid tax liability.

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If you have ever filed your federal income taxes with the Internal Revenue Service (IRS) and you owed money, you may have wondered to what extremes the IRS will go to in order to collect the money they are owed.  Specifically, you may have wondered if they could actually take money from your checking and savings accounts.

The short answer is a simple yes.  If you owe money to the IRS and you do not pay it, the IRS has powerful levy authority against your personal property.  An IRS levy is when the IRS seizes your property to sell it or otherwise use it to satisfy a tax liability.  The property the IRS can seize includes your checking accounts, savings accounts, and any other accounts held with a bank or a similar entity.

But the IRS will not begin to exercise their levy authority until they have taken various steps, including giving you sufficient warning.  These steps include:

• Sending you a Notice and Demand for Payment
• Noting that you have failed to or flat out refused to pay the tax
• Providing you a Final Notice of Intent to Levy

Once you have received the Final Notice, the IRS can begin to seize your personal property after 30 days.

If you want to prevent the IRS from seizing your bank accounts, you must act before they actually take the money.  Once the IRS has seized your bank accounts, it is very difficult to get the money back.  Therefore, you should take action sometime between when you receive the Final Notice of Intent to Levy and the end of the 30-day waiting period.

The primary steps people can take to stop the IRS from seizing your bank accounts include the following:

Pay the IRS all of the money you owe. This may generally be the worst option for the taxpayer, as it is as stated paying the IRS everything you owe, but it is a valid method of avoiding a levy.  It is often not an option for those who have received a Final Notice of Intent to Levy, because if you have the money to pay the IRS in full, you likely would have simply paid the IRS to start with.

Negotiate an installment agreement or offer in compromise with the IRS. The IRS offers both installment agreements and an offer in compromise as options to extend the timeframe over which you have to pay the tax due.  These are good options when you can afford to make a monthly payment but simply cannot pay the full balance due right now.

Prove that seizing your bank account would cause financial hardship. If you can prove that the IRS seizing your bank account would cause financial hardship, the IRS will temporarily suspend their collection efforts.  But they will generally not forgive the tax liability, so expect that with this option the IRS will contact you in the future to resume collection efforts once the hardship has passed.

If I owe money to the IRS I cannot pay, how can I get help in arranging one of the above options?

If you find yourself in a situation where you cannot pay your federal income tax, you should hire a tax attorney.  A tax attorney will have the training and experience needed to objectively evaluate your tax situation and advise you on what settlement or payment options the IRS makes available that will work best for you.

If you complete the short form below, you can get started by having a tax attorney review your circumstances free of charge.  While this review is completely confidential and does not obligate you to anything further, it will give you the opportunity to hear firsthand what a tax attorney can do to help in your situation.  You can also then hire the attorney to guide you through the entire process of negotiating your tax liability with the IRS.  So please complete the form to get started today.

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An offer in compromise is a settlement option offered by the Internal Revenue Service (IRS) that may allow a taxpayer to address their federal income tax liability for an amount less than the full amount owed.  If you are considering making an offer in compromise, keep in mind that there is no set timeframe by when the IRS will generally approve the offer.  The length of time it takes for the IRS to approve an offer in compromise varies from case to case, but in general, you can expect it to take anywhere from six to twelve months.  If the IRS has not approved or rejected your offer in compromise within two years from the date when the IRS receives the offer, then the IRS is required to accept the offer.

You may surprised that it generally takes up to a year to complete the offer in compromise process.  The lengthy amount of time can be caused for several different reasons:

Initial Assignment and Review. The IRS generally receives a large number of offers in compromise in a given tax year, and the IRS has a limited number of caseworkers who work on these offers.  Therefore, it may take some time before the specific details of your case are assigned to a caseworker for the review process to begin.

Request for Additional Information. Once an IRS caseworker begins to review your offer in compromise, they may determine that your offer is not complete.  This could be because you have not completed all the necessary application forms, you did not include the necessary fees required with the offer, you have not included documentation necessary to support your reason for requesting an offer in compromise, or they have other questions about your offer for which they need an answer.

Rejection and Appeal. If the IRS caseworker makes the decision to reject your offer in compromise (offers are usually rejected because the IRS considers the offer to be too low based on the income and other assets you disclosed as a part of the offer), you can appeal the decision.  Once you complete the required forms to initiate the appeals process, your appeal likewise takes time for the IRS to consider.  Alternatively, depending on the reason the IRS rejected your offer, you may choose not to appeal the rejection but rather to file a new offer in compromise

What if I need help submitting or appealing an offer in compromise?

A tax attorney can help you with your offer in compromise.  An attorney will have the training and experience to know the types of situations for which the IRS generally accepts offers in compromise, as well as the support you will need to include with your offer for it to be seriously considered.

If you complete the short form below, a professional tax attorney will  review your case free of charge.  This review is 100% confidential and does not obligate you to anything further, so you should get this initial evaluation to help determine the appropriate next steps for your tax situation.

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