Tax Relief Blog
Taxpayers in Brooklyn, New York and Kings county can get IRS tax help, tax relief, tax problem resolution, 941 employment payroll tax help, and IRS tax audit help by calling 877-788-2937.
IRS office serving Brooklyn, NY is located at 625 Fulton St., Brooklyn, NY 11201
IRS and DOJ Fight Tax Scams Through Civil and Criminal Proceedings and Outreach
The IRS and Department of Justice (DOJ) are pursing both civil and criminal means to fight tax scams, stated government speakers at the “Discussion of Common Tax Scams” panel of the March 9 Department of Justice Consumer Protection Conference at the Georgetown Law Center. The conference focused on combating consumer fraud in general, for example mortgage fraud, health care fraud, lottery scams and tax fraud. Panel speaker Sallie Cooper, acting director of operations, Criminal Investigation, IRS, said there was a common theme running through each of the types of fraud. “It is becoming so critical to protect your personal information,” she said. Previous panels had discussed the importance of taxpayers keeping their personal information safe from strangers, even within their own homes.
Also present was Carol Ide, civil-criminal coordinator, Tax Division, DOJ. Ide discussed the current practice of the DOJ in favoring parallel proceedings, by first pursuing civil means of shutting down a tax scheme such as return preparer fraud, and then moving forward with the slower criminal prosecution.
Both Cooper and Ides discussed several means taxpayers could use to protect themselves from the common tax schemes listed in the IRS’s 2012 “Dirty Dozen,” released on February 16 (IR-2012-23; TAXDAY, 2012/02/17, I.1). The annual list is meant to prevent taxpayers from falling victim throughout the tax year, and especially during the filing season. Listed schemes that could victimize unsuspecting taxpayers include identity theft, phishing and return preparer fraud. But taxpayers themselves can advance scams by hiding their income offshore, abusing charitable deductions, falsely claiming zero wages or, in the alternative, filing returns showing inflated income or deductible expenses.
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Identity Theft
The top scam for 2012 is identity theft, which generally involves identity thieves who take a legitimate taxpayer’s identity and personal information and use it to file a tax return and claim a fraudulent refund. The result is that the legitimate taxpayer will subsequently attempt to file his or her return, only to discover someone else has already filed a return in his or her name. To combat tax identity theft, the IRS has stepped up its internal reviews to spot false tax returns before refunds are issued. In 2011, the IRS protected more than $1.4 billion of taxpayer funds from getting into the wrong hands due to identity theft.
Cooper pointed taxpayers to the IRS website (https://www.irs.gov) for more information. She then warned against phishing, typically involving unsolicited emails or a fake websites posing as legitimate websites in order to lure taxpayers into providing their personal and financial information. “The IRS will generally not send an initial solicitation or request for personal information to a taxpayer, so that should be warning sign right away,” said Cooper.
Ide stated that, since November, the DOJ has pursued and, in many cases, obtained, strong sentences against refund crime perpetrators, including counts for aggravated identity theft. Many of the judgments in the courts had provided restitution to the taxpayer victim, the U.S. Treasury or both. “The courts have been pretty receptive to giving restitution to both categories of victims,” Ide said.
Return Preparer Fraud
Not all taxpayers are innocent victims of return preparer fraud. Some participate in fraudulent return preparation in order to secure a larger refund or lower tax liability. “All taxpayers subject to such scams may not be victims, but when you’re talking about questionable return preparers, you’re ultimately still responsible for what’s on that return,” warned Cooper. “Most of the return preparers are honest and decent, but we’re focusing on the ones who are taking advantage of individuals.”
With 60 percent of U.S. taxpayers hiring paid return preparers, both Cooper and Ide warned them to be careful before signing the completed return. Questions taxpayers should ask include: whether they are getting a larger return than originally expected; and whether the preparer is basing his or her fee on a percentage of the refund. In such cases, unscrupulous preparers would have an incentive to inflate a taxpayer’s refund. “Do not ever sign a blank return and let them fill it in and then mail it in,” said Ide.
“We can deal with [fraudulent preparers] in the federal government in two ways; prosecuting them, because it is a crime. But the other thing we can do…is get a civil injunction against a bad return preparer,” said Ide. “That can frequently be done much more quickly than with a criminal prosecution…. We get a lot of these injunctions by consent.”
Ide stated that, in general, an injunction against a bad preparer requires that he or she notify all clients that he or she had prepared false returns in the past and that theirs might be affected. Additionally, the preparer would have to provide the IRS with a list of all clients, which often would result in the IRS tracking those clients down to audit their returns. Many might be innocent, but others might have participated in the filing of a bogus return.
Free Money
Finally, Cooper discussed “free money” scams, which typically target lower-income taxpayers. Perpetrators often promise nonexistent Social Security refunds or overinflated tax credits. They generally offer bad tax advice in exchange for cash, for example charging taxpayers for filing their returns, which sometimes do not go through.
“One of the best preventative measures is awareness,” said Cooper. “So we do outreach and go talk to people so they are aware these scams are going on.” She stated that taxpayers should think twice about such offers. Additionally, they should be careful not to hand out their Social Security number to anyone if they can help it. She stated that, many times, official forms might have a blank for a Social Security number, but could be processed without it. “The less information you’re able to reveal, the better,” said Cooper.
The Treasury Inspector General for Tax Administration (TIGTA) issued the following reports finding that:
The Business Master File Case Creation Nonfiler Identification Process (BMF CCNIP) for targeting business nonfilers has increased the number of returns secured, but possibly only as a result of an increase in the total closed inventory (TAXDAY, 2012/03/02, T.1). TIGTA made four recommendations for the Enterprise Collection Strategy, Small Business/ Self-Employed Division (ECS), including that ECS determine the causes of increases or decreases in closure types and make selection code adjustments.
The IRS, despite disallowing $1.6 billion in erroneous claims for first-time homebuyer credits, could have identified even more erroneous claims (TAXDAY, 2012/03/01, T.1). TIGTA recommended that the IRS update examination results throughout the year and ensure that homebuyer credit claims are run against IRS automated examination filters and that the highest risk cases are selected for post-refund examinations.
The IRS Disaster Assistance Program guidelines were incomplete and inaccurate and did not reflect the processes and procedures used by employees to assess disasters and grant tax relief to affected individuals and businesses (TAXDAY, 2012/02/29, T.1). Additionally, the Program Office was not documenting the assessment of the severity and scope of damage for each federally declared disaster when determining the length and type of tax relief to be granted and the IRS did not always timely release disaster relief indicators from individual tax accounts.
IRS
Net Investment Income Guidance. The IRS will soon issue guidance under Code Sec. 1411 in connection with the 3.8-percent Unearned Income Medicare Contribution Tax, an IRS official told practitioners on February 29 at a program sponsored by the D.C. Bar’s Taxation Section (TAXDAY, 2012/03/01, I.4).
Public Inspection/Code Sec. 6110. The IRS released final regulations pertaining to the release for public inspection of certain documents relating to tax-exempt organizations (T.D. 9581; TAXDAY, 2012/02/29, I.1). The U.S. Court of Appeals had previously held in Tax Analysts, CA-DC, 2003-2 USTC ¶50,730, that the IRS had improperly withheld from public inspection letter rulings on tax-exempt status after relying on certain regulations under Code Secs. 6104 and 6110. The final regulations eliminate the portions of the regulations that the court found to be in violation of Code Sec. 6110.
Correspondence Audits. Panelists at a recent IRS Oversight Board public meeting suggested improvements to the IRS’s correspondence audit process, which they stated is too burdensome for many taxpayers (TAXDAY, 2012/02/29, I.5). Speakers suggested narrowing the scope of audit selection, streamlining IRS-taxpayer communication, relaying telephone questions to appropriately trained IRS personnel, or even eliminating the need for telephone services through expanded use of e-services.
March Per Diem Rates for Foreign Travel. The U.S. State Department has released a listing of maximum travel per diem allowances for travel in foreign areas, effective as of March 1, 2012 (TAXDAY, 2012/02/27, I.1).
IRS Tax Tips. The IRS released tax tips on the following topics:
Boosting your refund (TAXDAY 2012/03/02, I.2);
Free Tax Help for Military Personnel and Their Families (TAXDAY, 2012/03/01, I.5);
Mortgage Debt Forgiveness (TAXDAY, 2012/02/29, I.6);
Four Ways to Find Free Tax Help (TAXDAY, 2012/02/28, I.1);
Education Tax Credits For Higher Education (TAXDAY, 2012/02/27, I.2).
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Brooklyn is the most populous of New York City’s five boroughs, with approximately 2.5 million residents,[1] and the second-largest in area. Since 1896, Brooklyn has had the same boundaries as Kings County, which is now the most populous county in New York State and the second-most densely populated county in the United States, after New York County (Manhattan).[2] It is also the westernmost county on Long Island.
Brooklyn was an independent city until it was annexed by New York City in 1898. It continues to maintain a distinct culture. Many Brooklyn neighborhoods are ethnic enclaves where particular ethnic groups and cultures predominate. Brooklyn’s official motto is Eendraght Maeckt Maght. Written in the (early modern spelling of the) Dutch language, it is inspired by the motto of the United Dutch Provinces and translated “Unity makes strength”. The motto is displayed on the borough seal and flag, which also feature a young robed woman bearing fasces, a traditional emblem of republicanism. Brooklyn’s official colors are blue and gold.
New York Corporate Income, Sales and Use Taxes: U.S. Supreme Court Denial of Review Allows RICO Claim Based on Alleged Tax Fraud to Proceed
The U.S. Supreme Court has denied a company’s request to decide whether its competitor may bring a claim under §1962(a) of the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§1961-1968, alleging that the competitor suffered losses because the company was able to open a new store by investing funds derived from its failure to collect New York sales tax and underreporting of its taxable income. In a previous trip to the U.S. Supreme Court in this case in 2006, the high court disallowed a separate RICO claim brought under a different subsection of the law. On remand, however, the U.S. Court of Appeals for the Second Circuit reversed a district court judgment and reinstated the claim brought under §1962(a). (TAXDAY, 2011/06/30, S.23) As a result of the U.S. Supreme Court’s denial of review, the RICO action against the company brought by its competitor may now proceed to trial.
Anza v. Ideal Steel Supply Corp., U.S. Supreme Court, Dkt. 11-659, petition for certiorari denied February 27, 2012
Sellers in Stock and Asset Sales Not Subject to Transferee Liability (Sloan, TCM)
In a case involving the sale of a radio broadcasting corporation, in which an asset sale and a subsequent stock sale were improperly used to offset gain, the sellers were not subject to transferee liability. The corporation, which operated several radio stations over many years, was owned by married individuals through two trusts. The taxpayers sold the corporation’s assets, excluding the corporate name, to another corporation.
About six months later, the taxpayers sold the stock in the corporation to a different purchaser. This sale included all of the stock in the taxpayer’s corporation, along with the proceeds it had received from the asset sale. There had been no distributions by the corporation in the interval between the two sales. The purchaser, its attorneys, and other persons participating in the asset sale were different from those participating in the stock sale.
The corporation, with a new name and owners and no further link to the taxpayers, was investigated by the IRS, and its ostensible president signed several agreements over the years extending the period of limitations for assessment of taxes and penalties. The corporation was found liable for taxes and penalties, which it failed to pay, resulting in its being subject to levy by the IRS. The corporation was eventually dissolved and nothing was collected from it by the IRS. The IRS issued transferee liability notices to the taxpayers, maintaining that the trusts were liable as transferees of assets for the unpaid liability of the now-dissolved corporation for the year of the stock sale.
Under Code Sec. 6901(c)(1), the time to assess transferee liability is limited to one year after expiration of the limitations period of the transferor. Under Code Sec. 6062, extensions may be signed by a corporate officer authorized to do so. The corporation’s president had signed several consents to extend the period for assessing liability against the corporation as transferor. The taxpayers argued that the president had held another corporate office, as well as that of president, in violation of the corporation’s bylaws, thus invalidating his status as corporate president. However, the corporation had held that individual out as its president, so he had ostensible authority to sign the consent to extend the period of limitations, even if state law precluded his having actual authority.
Next, the IRS advanced the “substance over form” doctrine to recast the stock sale as a liquidating distribution. The Tax Court declined to find the form of the transactions invalid, since the two sales were independent of one another, and there was no evidence that the taxpayers were aware of the stock purchaser’s plans to offset gain from the asset sale through illegitimate means.
N.L. Slone, TC Memo. 2012-57, Dec. 58,964(M)
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Since consolidation with New York City in 1898, Brooklyn has been governed by the New York City Charter that provides for a “strong” mayor-council system. The centralized New York City government is responsible for public education, correctional institutions, libraries, public safety, recreational facilities, sanitation, water supply, and welfare services.
Brooklyn’s job market is driven by three main factors: the performance of the national and city economy, population flows and the borough’s position as a convenient back office for New York’s businesses.
Forty-four percent of Brooklyn’s employed population, or 410,000 people, work in the borough; more than half of the borough’s residents work outside its boundaries. As a result, economic conditions in Manhattan are important to the borough’s jobseekers. Strong international immigration to Brooklyn generates jobs in services, retailing and construction.
In recent years, Brooklyn has benefited from a steady influx of financial back-office operations from Manhattan, the rapid growth of a high-tech and entertainment economy in DUMBO, and strong growth in support services such as accounting, personal supply agencies, and computer services firms.
Brooklyn contains dozens of distinct neighborhoods, representing many of the major ethnic groups found within the New York City area. The borough is home to a large African-American community. Bedford-Stuyvesant is home to one of the most famous African-American communities in the city, along with Brownsville and East New York. “Bed-Stuy” is a hub for African-American culture, often referenced in hip hop and African-American arts. Brooklyn’s African-American and Caribbean communities are spread throughout much of Brooklyn.
Brooklyn is also home to many Russians and Ukrainians, who are mainly concentrated in community of Brighton Beach and Sheepshead Bay. Brighton Beach features many Russian and Ukrainian businesses. Because of the large Ukrainian community, it has been nicknamed “Little Odessa.” However, recently, it has been renamed to “Little Russia” because of the overwhelming presence of the Russian population. Originally these were mostly Jews, now however the Ukrainian and Russian communities of Brighton Beach represent various aspects of Russian culture.
Bushwick is the largest hub of Brooklyn’s Hispanic-American community. Like other neighborhoods in New York City, Bushwick’s Hispanic population is mainly Puerto Rican, with many Dominicans and peoples from several South American nations as well. As nearly 80% of Bushwick’s population is Hispanic, its residents have created many businesses to support their various national and distinct traditions in food and other items. Sunset Park’s population is 42% Hispanic, made up of these various ethnic groups. Brooklyn’s main Hispanic groups are Puerto Ricans, Mexicans, Dominicans, and Panamanians, they are spread out throughout the borough. Puerto Ricans and Dominicans are predominant in Bushwick, Williamsburg, and East New York. While Mexicans are predominant in Sunset Park and Panamanians in Crown Heights.
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Italian Americans are mainly concentrated in the neighborhoods of Bensonhurst, Dyker Heights and Bay Ridge, where there are many Italian restaurants and pizzerias. Italian Americans live throughout most of southern Brooklyn, including Bath Beach, Gravesend, Marine Park, Mill Basin, and Bergen Beach. The Carroll Gardens area, as well as the northern half of Williamsburg, also have long-standing Italian-American communities.
Orthodox Jews and Hasidic Jews have become concentrated in Borough Park, where there are many yeshivas, synagogues, and kosher delicatessens, as well as other Jewish businesses. Other notable religious Orthodox and Hasidic Jewish neighborhoods are in Kensington, Midwood, Williamsburg, Flatbush, Canarsie, Sea Gate and Crown Heights. Many hospitals in Brooklyn were started by Jewish charities, including Maimonides Medical Center in Borough Park, and Brookdale Hospital in Flatbush. Many non-religious Jews are concentrated in Ditmas Park, Windsor Terrace and Park Slope. Brooklyn’s Polish are largely concentrated in Greenpoint, which is home to Little Poland. They are also scattered throughout the southern parts of Brooklyn.
Brooklyn is home to Orthodox Jewish communities.
Brooklyn’s Greek Americans live throughout the borough, but their businesses today are concentrated in Downtown Brooklyn near Atlantic Avenue. Greek-owned diners are throughout the borough.
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Chinese Americans live throughout the southern parts of Brooklyn, in Sunset Park, Bensonhurst, Gravesend, and Homecrest. The largest concentration is in Sunset Park along 8th Avenue, which is known for Chinese culture. It is called “Brooklyn’s Chinatown”. Many Chinese restaurants can be found throughout Sunset Park, and the area hosts a popular Chinese New Year celebration.
Irish Americans can be found throughout Brooklyn, in low to moderate concentrations in the neighborhoods of Bay Ridge, Marine Park, Gerritsen Beach, and Vinegar Hill. Many moved east on Long Island in the mid-twentieth century.
Today, Arab Americans have moved into the southwest portion of Brooklyn, particularly in Bay Ridge, where there are many Middle Eastern restaurants and hookah lounges. Bay Ridge has Arabs of both Christian and Islamic faiths, where there are Arabic churches, particularly Maronite and Coptic Orthodox churches, as well as Mosques. Earlier, the area was known predominately for its Irish, Norwegian, and Scottish populations. Traditionally, many Middle Eastern businesses have flourished on Atlantic Avenue west of Flatbush Avenue.
Brooklyn’s West Indian community is concentrated in the Crown Heights, Flatbush, East Flatbush, Kensington and Canarsie neighborhoods in central Brooklyn. Brooklyn is home to one of the largest communities of West Indians outside of the Caribbean, being rivaled only by London, Miami and Toronto. Although the largest West Indian groups in Brooklyn are Jamaicans and Haitians, there are West Indian immigrants from nearly every part of the Caribbean. Crown Heights and Flatbush are home to many of Brooklyn’s West Indian restaurants and bakeries. The West Indian Labor Day Parade, takes place every Labor Day on Eastern Parkway.
If you have a tax problem or an IRS audit from an IRS agent, tax examiner, or revenue officer from 625 Fulton St., Brooklyn, NY 11201. We can help you call us at 877-788-2937.
