August 2013 Archives

IRS to Raise User Fees for Installment Agreements and Offers in Compromise

The IRS has issued proposed regulations to raise the user fees for installment agreements and offers in compromise on January 1, 2014. For more information, click here.

IRS Announces Guidance on Federal Tax Treatment for Same-Sex Couples

On August 29, 2013, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for all federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

Reminder: For Most Truckers, Highway Use Tax Return Due Sept. 3

For Truckers and other owners of heavy highway vehicles, the next federal highway use tax return is due on Tuesday, September 3, 2013. This due date generally applies to Form 2290 and the accompanying tax payment for the tax year that begins on July 1, 2013, and ends on June 30, 2014. Returns must be filed and tax payments made by Sept. 3 for vehicles first used on the road during July. For vehicles first used after July, the deadline is the last day of the month following the month of first use.

Revocation of California tax breaks leaves many with tax debt

Five years ago, the state of California offered small business owners tax breaks if they opened specific types of businesses. In Dec. 2012, the tax breaks were ruled unconstitutional by a court. As a result, the small businesses that once benefited from the tax breaks are now faced with tax debt.

California audits: IRS may not be in compliance with Tax Code

California taxpayers may be interested to know that the Treasury Inspector General for Tax Administration (TIGTA) recently released its annual report on whether the IRS is in compliance with Section 6501(c)(4)(B) of the Tax Code. The IRS is supposed to give taxpayers and their representatives notice that they can decline an extension of the statute of limitations. In the alternative, the Code section also allows the taxpayer to make a request as to the length of any extension and the issues it may cover. When TIGTA reviewed 51 IRS audits, it found that this Code section had not been adhered to by IRS employees.

IRS Targets Small Businesses for Tax Payments

The IRS is contacting small businesses based on a determination that close to $450 billion of taxes goes uncollected and approximately $140,000 billion of that amount is owed by small businesses. By identifying small businesses with high credit card sales, the IRS is confirming that cash sales are not being under-reported. For more details, see the CNN Money article written by Jose Pagilery

Income Tax Benefits to Families with Special Needs

The number of individuals with special needs is on the rise. Whether this is due to better recognition and diagnostic tools or an actual escalation in disabilities, the increase is taking its toll on state and local government program budgets. Such shortfalls require parents to cover more of their children's medical and other related expenses. There are some income tax benefits that can help families with these costs, such as credits and deductions related to the dependency exemption, medical expenses, special instruction, capital expenditures for medically required home improvements, impairment-related work expenditures, and the earned income tax credit. The attached article reported in June 2013 in the Journal of Accountancy provides a brief overview of some common available tax benefits, as well as limitations on their use. Families who may qualify for some or all of the tax benefits should consult with their tax professional on reporting requirements. For the full article, click here.


On Friday, August 16, 2013, the US Attorney's Office for the Southern District of New York announced that Swiss lawyer Edgar Paltzer pled guilty to conspiring with U.S. taxpayers and other to evade federal income taxes and file false tax returns. Mr. Paltzer worked with U.S. taxpayers to establish and operate sham foundations and other entities to nominally hold U.S. taxpayers' accounts in Swiss banks, allowing such assets to remain undeclared to the U.S. Furthermore, when certain Swiss banks required the U.S. taxpayers to close their accounts, Mr. Paltzer assisted the U.S. taxpayers in moving their accounts to other Swiss banks willing to maintain undeclared assets on behalf of U.S. taxpayers. Mr. Paltzer faces a maximum sentence of five years in prison. He is scheduled to be sentenced on February 21, 2014. A copy of the US Attorney's press release can be found at this link and a copy of the plea agreement can be found here

IRS Offers Free Tutorial entitled "Understanding Taxes"

The IRS offers a free online interactive program entitled "Understanding Taxes." Designed in partnership with teachers for use in middle school, high school, or community college classrooms, the program can be used by anyone to learn about the history, theory, and application of taxes in the United States. It features 38 lessons on different aspects of the American tax system, including the basics of tax preparation, glossary of tax terms, and tax trivia. The program is available all year and there are no registration or login requirements so you can return at any time. The IRS generally updates the program each fall to reflect any updates to tax law and forms. You can access the "Understanding Taxes" program here:

IRS settles with bank re tax evaders

The United States is one of the only countries that tax the earnings of its citizens that are earned in another country. As such, the IRS often deals with foreign banks in order to discover accounts of Americans who are avoiding paying taxes on foreign earnings. Since before 2011, one of those foreign banks has been under investigation for "opening and maintaining" accounts that are undeclared by American citizens, including some in California.

Time for Claiming Innocent Spouse Relief Extended under Proposed Regulations

This week, the IRS issued proposed regulations that would make permanent rules to extend the amount of time taxpayers can apply for equitable relief through an innocent spouse application. Under the proposed rules, taxpayers would have up to ten years - or generally, the same time frame as IRS has to collect - to file for equitable relief. If the taxpayer is making a claim for refund, the statute of limitations for refund would apply. If approved, the regulations will be considered effective as of the date of Notice 2011-70 which means that they would apply to applications for innocent spouse relief filed on or after July 25, 2011. See proposed REG-132251-11 here.

IRS Statistics of Individual Income Tax Returns Released

The IRS has released Publication 1304 which reports on statistical data from a sampling of the 145.4 million individual income tax returns filed for tax year 2011. Tax filings are up, adjusted gross income has risen and IRS collections continue to increase. The report provides information regarding sources of income, adjusted gross income, exemptions, deductions, taxable income, income tax, modified income tax, tax credits, self-employment tax and tax payments. The report also describes data based on classifications such as marital status and age.

Liechtenstein Bank Pays $23.8 Million to U.S. in Non-Prosecution Agreement

The United States has agreed to forego criminal prosecution against the bank, Liechtensteinsche Landesbank AG, for opening and maintaining bank accounts for U.S. taxpayers from 2001 through 2011 and assisting U.S. taxpayers in evading their U.S. tax obligations. In addition, new Liechtenstein legislation has resulted in U.S. taxpayer names being turned over to the Department of Justice.

IRS tax controversy with gift basket company dismissed by court

A gift basket company and its founder were sued by the IRS just days before Christmas back in 2011. The IRS filed the case saying that the company was not entitled to tax refunds it received for the 2005 and 2006 tax years. In July of this year, a U.S. District Court Judge in California dismissed the IRS' case putting an end to this tax controversy.

Central District of California to hear tax crimes case involving refunds

A man will soon be transported by the U.S. Marshals Service to the Central District of California to face charges involving tax fraud and identify theft. The IRS Criminal Investigation division conducted the investigation that led to the man's indictment on tax crimes. The man, who was not from California, was apprehended at an airport on the east coast.

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For more information about our tax law services, or to discuss your tax matter, call our Sacramento office at (916) 488-8501 or toll free at (800) 684-7147. You may also send us an inquiry via email.

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