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Deadline to Reduce Your Income Tax Penalties Extended

Important Information if you have a hidden offshore account - Deadline is Extended.

In a press release issued today from Washington, the Internal Revenue Service announced it is extending the voluntary disclosure deadline from Sept 23, 2009, to October 15, 2009.

In March the IRS issued special provisions to allow taxpayers with unreported income from offshore accounts to voluntarily come forward and avoid some very harsh penalties.

Apparently this was a very popular action when taken in conjunction with the actions of some foreign banks to agree to disclose names to the IRS. Taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.

The Internal Revenue Service had received repeated requests from tax practitioners and attorneys around the country following a large number of taxpayer requests. The deadline extension is intended to provide some relief for those taxpayers who wanted to come forward prior to the deadline but were facing logistical and administrative challanges in meeting the deadline.  The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.

The IRS also announced that there will be no further extensions. So, if you are one of those with an unreported offshore account, now is the time to come forward. Time is running out. ACT NOW!

Is Your Income Tax Return Preparer Regulated?

Are you behind in filing your income tax or payroll tax returns? Do you have one or more years of unfiled tax returns? If so, be careful who you choose to help you get caught up.

The IRS wants to start regulating paid tax preparers used by more than half the nation's taxpayers in an effort to reduce fraud and errors. IRS Commissioner Doug Schulman recently discussed the fact that new rules could require education and training as well as licensing for people who get paid to prepare returns.

From 2006 through 2008, the IRS initiated more than 600 investigations of fraud among tax preparers. During that time, 356 tax preparers were convicted, with more than 80 percent of them sentenced to prison, home confinement or electronic monitoring.

But when the IRS detects a fraudulent return, it's the taxpayer – not the tax preparer – who must pay the additional taxes, interest and any penalties, according to the IRS.

So, check out the credentials of anyone you are considering hiring to help you prepare back tax returns or even current unfiled tax returns.

Virginia Increases Tax Collection Efforts

According to a recent article in the Washingon Post, Virginia is increasing its spending in its efforts to collect unpaid taxes. The state has hired 55 workers at a cost of $1.2 million while eliminating jobs in other areas and cutting core government services in its efforts to address a $2.9 billion shortfall.

According to the Virginia State Department of Taxation, as of last year taxpayers owed the state $1.4 billion: $51 million just for the past 30 days, about $284 million came due in the past year, and the rest has been delinquent for more than a year. The amounts include upaid payroll tax, unpaid income tax, and unpaid sales and excise taxes.

Of the 55 newly hired employees, 15 are collectors. So, one should expect the state to be more aggressive in its efforts to collect unpaid taxes.

What can the state government do to collect those taxes? Make phone calls to your home or business. Visit your business or your home. Revoke your business license. Ask a court to freeze your bank accounts. Petition the Internal Revenue Service (IRS) to turn over your federal tax refund.

The Sodowsky Law Firm, located in Fairfax, Virginia, helps businesses and individuals resolve unpaid federal tax and unpaid state tax issues, including tax liens, levies, and unfiled tax returns. So, if you are among those who owe the Commonwealth of Virginia a portion of that $1.4 billion, check out www.sodowskylaw.com or call us at 703.98.8000 to schedule a confidential 1/2 hour consultation.