James Gandolfini's Passing Makes Plenty for the IRS

January 2, 2014 by Christin Bucci

James Gandolfini was a beloved actor in Hollywood, most notably for his lead role as Tony Soprano in the popular gangster series, "The Sopranos," on HBO. The event of his sudden death over this past summer from a heart attack, affords us the opportunity to glean lessons from his estate planning, or as many suggest, lack thereof.

A plethora of articles have been written detailing the ways in which Mr. Gandolfini could have done much better - estate planning wise. We borrow here from some of their analysis as well explain some simple estate tax avoidance strategies to prevent the IRS from taking your hard-earned money after you pass. While, many people avoid planning their estate or drafting a will because of some existential anxiety, this should be a wake up call.

Upon viewing his estate plan, it seems that neither Mr. Gandolfini nor his financial advisors anticipated his sudden and tragic untimely passing. Perhaps, his will was a rushed disposition to protect his year-old daughter while still providing for his sisters, and new wife. I say this because as the estate stands and before Mr. Gandolfini's heirs receive any money, the IRS will have taken nearly half. Forbes reports that the IRS and state tax collectors will likely get $30 million off the top of Gandolfini's $70 million probate estate. Unfortunately for his heirs, much of these taxes could have been easily avoided by consulting with an informed estate-planning attorney.

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If You Have Foreign Accounts In The State Of Israel, It Is Time To Get IRS Compliant

November 25, 2013 by Christin Bucci

If you are a U.S. taxpayer, the Internal Revenue Service makes it their business to know all about you. Until now, however, there was still a lot of information to which they had little access. For instance, if you had monies in offshore accounts, you may have left no apparent trace. As in most arenas, technology has changed everything. The near instant transfer of information online has enabled a true global economy. Now, the U.S. Government need not sniff you out. They have decided to hold the Foreign Financial Institutions, who manage your monies, financially responsible if they don't report you to the IRS. Shifting the financial burden, with the click of a mouse, has changed everything.

The Foreign Account Tax Compliance Act, or FACTA, was enacted in 2010 to require that Foreign Financial Institutions report to the IRS information about United States citizens and Green Card holders that hold foreign accounts and assets. FACTA represents both the pinnacle and commencement of the valiant efforts of the United States government to prevent tax evasion, and recover the tax monies owed them from Foreign Financial Institutions and U.S. Citizens dealing in foreign assets or holding foreign accounts. If you have foreign assets or foreign accounts, it's time to make a date with your neighborhood tax lawyer!

The Israeli government has showed its intent to comply with FACTA by setting up a special committee to check obedience, led by Frieda Israeli, and including many other members of Israeli government from the Israeli Securities Authority, the Israel Tax Authority, the Securities Markets, and the banking sections of regulatory bodies within the Finance Ministry and the Justice Ministry. To create a climate of compliance and enable FACTA, the U.S. is negotiating entry into Intergovernmental Agreements with other countries, including Israel. While the terms of the final deal with Israel have not yet been reached, these Agreements help compliance by setting up the model for information exchange between Foreign Financial Institutions and the IRS.

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Identity Theft

November 18, 2013 by Christin Bucci

Have you been the victim of an identity theft crime? You are not alone. Identity theft has become the number one national consumer complaint, and Florida has the highest rate of identity theft in the United States. The Department of Justice has acknowledged identity theft as the number one for profit crime. Our tax attorneys are experienced and knowledgeable in dealing with identity theft victims and their recovery. There are important deadlines that the victims of identity theft must meet in order to avoid responsibility of the debt or penalties.

It is so easily overstated and overlooked, but very important to remember that anyone can be a victim of identity theft. Anytime that you give your personal identifying information you are susceptible to becoming a victim. Most of the time the identity thief simply needs a name, date of birth and Social Security Number.

One common misconception is that the victims of identity theft are irresponsible with their personal information, but investigations have revealed massive schemes where victims' personal information was leaked without any wrongdoing from the victim. Employees at hospitals, insurance offices, doctor's offices, attorney's offices, and even accountant's offices has been found guilty of stealing private information. In other circumstances, the government inadvertently leaked private identifying information online.

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South Florida Taxpayers Beware of Dangerous Phone Calls Alleging to be the IRS!

November 13, 2013 by Christin Bucci

Beware if you receive a phone call from the Internal Revenue Service asking for a payment for unpaid taxes! The IRS usually does not contact people by phone to obtain payment for past due taxes. In fact, the IRS has now officially issued a warning to people not to respond should they receive a call from someone representing themselves as the IRS.

If this happens to you, it is more than likely a scam attempt by very creative and resourceful characters, who want to steal your money. Life in the identity theft capital of the United States - Florida - isn't all sunshine and retirement, these days.

I tell you as a Florida tax attorney who has spoken all over the United States about identity theft, just hang up the phone. The IRS will not call or e-mail you! Don't be tricked into to giving your personal identify information such as name, date of birth and especially Social Security number. These scammers will be convincing, often times they will already be armed with some of your private information - the last four digits of your Social Security number or email address but do not let your guard down. These criminal callers are informed about some details of your life that may mislead you into trusting them.

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Fort Lauderdale Attorney, Christin Bucci, speaks on Identity Theft at 2013 ABA Midyear Meeting

November 1, 2013 by Christin Bucci

Have you been the victim of identity theft? It's not just you. Just ninety miles away from a national epicenter of identity theft, Tampa, Florida, our ABA renowned Florida tax attorney, Christin Bucci, was invited to speak on the tax refund identity theft epidemic which is sweeping the nation. Ms. Bucci was chosen as a panelist and joined several other panelists including the National Identity Theft Coordinator from IRS' Criminal Investigation Division, Michael J. DePalma, and the Department of Justice Tax Division Representative, Larry John Wszalek, to discuss this issue.

The conference was a huge success! Attorneys from all over the country descended upon Orlando, Florida at the end of January 2013, while Ms. Bucci laid bare the simple scheme used by identity thieves to steal legitimate tax refunds from taxpayers- and the resultantly complex undertaking it is to fix the problem with the IRS. It typically goes like this:

Using stolen private Social Security Numbers, birthdays, full names and addresses of persons, a fraudulent tax return is filed with the IRS, reporting fictitious wages, and withholding, and claiming a tax refund. As Congress has statutorily mandated the IRS give speedy refunds to taxpayers, the refunds are typically sent out to taxpayers in the form of an untraceable debit card. Before the taxpayer even becomes aware that their identity has been compromised, the refund monies to which the legitimate taxpayer is entitled, have already been stolen!

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IRS Takes Down Florida Doctor Who Hid $35 million in Foreign Bank Accounts

October 30, 2013 by Christin Bucci

Thursday, October 24, 2013 was a sad day for the international medical community, as one of their own, psychiatrist, Dr. Patricia Lynn Hough, was convicted by a jury in Ft. Myers, Florida of conspiracy to defraud the Internal Revenue Service by hiding upwards of $35 million dollars in offshore accounts at UBS and other foreign banks. She and her husband are doctors who owned two medical schools in the Caribbean, which sold for $35 million dollars in April 2007. Shortly thereafter, the money from the sales disappeared and was traced by the IRS to offshore accounts.

The unabashed nature of her fraud is compelling considering the psychiatric profession from which she stems. While, I am not a doctor - but a tax lawyer - it certainly sounds like a hint of megalomania - no doubt about it.

Using nominee entities and other shell names to conceal their identities, she and her husband, who still awaits trial, flagrantly defrauded the federal government by taking the monies from the sale, and moving them offshore. $35 million is a large amount of money to simply disappear. It is absolutely legal to have offshore accounts, but these accounts must be declared. Dr. Hough, however, failed to disclose any of her offshore holdings, or declare any income from the sale of her medical schools. The evidence also showed that Dr. Hough filed false tax returns understating her income in 2005, 2006, 2007, and 2008.

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Transparency is the New Black: If you are business that deals in credit cards, the IRS now demands you line up the numbers for them!

October 29, 2013 by Christin Bucci

Have you heard of a 1099-K? If your small business accepts credit cards, or even if you have sold some of your wares online and receive credit card income that for whatever reason does not show up similarly on the tax return that you send to the IRS, you are going to find out what a 1099-K is pretty soon.

The IRS has charged credit card companies with sending out a 1099-K to its merchants, with the aim of accounting for the multibillion dollar tax gap - that is, the gap between what the IRS claims they are owed based on their consumer income estimations, and what they actually receive in payment from taxpayers.

These 1099-K's have been termed "mismatch notices," because the numbers usually just don't line up. It is too labor intensive and a general waste of time for the IRS to attempt to do the work themselves, to match credit card income on tax returns to 1099-K reports. This is because many merchants have special arrangements, such as cash-back offers, and other deals where they are paying back out portions of their gross income to consumers. For these reasons and others, marketplace credit card receipts don't always match with credit card income reported on individual and business tax returns.

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Fort Lauderdale Attorney, Christin Bucci, as Amicus Curiae, Petitions for a Writ of Certiorari to Supreme Court of the United States in Fifth Amendment Case Regarding Protections for Offshore Account Holders.

October 23, 2013 by Christin Bucci

Do you think that you are protected by your Fifth Amendment Constitutional right against self-incrimination if you have offshore account holdings? Think again. Assaults on your rights are far reaching when it comes to U.S. citizens with monies in offshore bank accounts. You have no protections left. If this is you, we can help you come forward. The mountain will only get harder to climb if you don't act now. The Supreme Court has recently declined to take up the case which may have helped shield you from exposure. We urge you to address this situation, before the IRS and grand jury come knocking. The Florida tax attorneys at Bucci Law Offices can help.

Amici Curiae, counsel for John and Jane Doe, petitioned the Supreme Court for a Writ of Certiorari, to argue that an individual should be able to assert his Fifth Amendment privilege against self-incrimination in response to grand jury subpoenas that demand a criminal target produce all his foreign bank account information, both known and unknown, to federal prosecutors. The grand jury currently requires that a suspected offshore account holder produce all foreign bank records of his holdings, that he, himself, has not kept, and in so doing, incriminate himself.

The government, in such a case, places the burden of production on the criminal target to make their case against him. Not only is this counter-intuitive to the way a criminal trial normally operates, it is unconstitutional to mandate that a criminal target gather and come forward with evidence that will incriminate him. This is the whole point of the privilege against self-incrimination, that a target need not testify against himself.

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ARE YOU ENTITLED TO A REFUND? LEGALLY MARRIED SAME-SEX COUPLES ENTITLED TO SWEEPING TAX REFUNDS

October 14, 2013 by Christin Bucci

Does the IRS owe you money?? As a result of the landmark decision in United States vs. Windsor, and the striking down of the infamous 1996 Defense against Marriage Act (DOMA), same-sex couples that are legally married in any of the fifty states, District of Columbia, U.S. territories, or a foreign country are now eligible to refunds on ALL federal tax provisions that favor married couples who qualify. This comprehensive ruling and resulting IRS policy applies to same-sex marriages regardless of which state the couple lives in or are domicile. If you are legally married to your same-sex partner contact us to capitalize on this exciting news!

Currently, fourteen states (including the District of Columbia) recognize same-sex marriage. These states are California, Connecticut, Delaware, the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Washington, and Vermont. The above named states have affirmed the right for same-sex couples to marry - whether by Court decision, legislative decision, or popular vote.

A little history on marriage: The regulation of marriage has historically been a right reserved to the states, until the federal government signed DOMA into law in 1996. Once states began to affirm same-sex couples the right to marry, it was DOMA which stood in the way of their national recognition. Same-sex couples that were married in a state where it was legal, were still considered unmarried under national law, where it had become illegal. This created a marriage half-breed, so to speak. These marriages were not given the credit of federal tax benefit by the IRS thanks to DOMA.

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Former Detroit Pistons Owner's Estate Slam-Dunked with Taxes!

October 11, 2013 by Christin Bucci

The IRS believes that the Estate of former owner of the Detroit Pistons, Bill Davidson, owes around $1.9 billion in total tax liability. The tax attorney defending Davidson's estate is gonna have a field day with this one. Davidson died on March 13, 2009 with his net worth estimated at $3 billion. The IRS has alleged that Bill Davidson did not properly account for huge gifts to family members and the value of stocks he had put in trust for his heirs.

The Davidson Estate claims the IRS incorrectly concluded that the values of stocks transferred into trust were worth more than their true value. The estate's argument is based on the devaluation of the stock of Davidson's Company, Guardian Industries, at the time of his death. The IRS has answered that their valuation method was more reliable than the method used by the Davidson Estate.

The IRS has taken issue with the manner of how the privately-held stocks were placed into family members' trust accounts, and alleges that the accountants that handled the Davidson Estate undervalued the shares by as much as $1,500 per share of Guardian Industries stock that Davidson placed in trust for his children and grandchildren. The IRS argues that this gift is taxable and the tax deficiencies relating to these gifts go back to 2005, totaling more than $900 million in taxable gift amounts.


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Michael Jackson's Estate Tells the IRS to Beat It!

October 9, 2013 by Christin Bucci

Michael Jackson's Estate for tax purposes is not Black or White, but decidedly a shade of grey. A $700 million deficiency exists between the amount the 2009 Jackson Estate paid and how much the IRS believes it should have paid. How could such a difference in calculations of taxable estate interest exist? Let your friendly Florida tax attorney take a good look at it:

Unfortunately for his heirs, Michael Jackson did not expire in 2010 when the estate tax was zero due to an anomaly in the law. In 2009, when the King of Pop passed, the Federal estate tax exemption was $3,500,000 for decedents. Therefore, all assets in excess of the 2009 exempted amount would have been taxable.

Estate taxes are calculated using the net value of assets that a decedent has in their control at the time of death. Interestingly, an estate may opt to use the 'alternate value date' which is the value of the assets as of six months after the time of death. The purpose of this option is to account for any meaningful drop in value of the estate due to market fluctuations or business devaluation.

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Government Shutdown Assures the IRS Will Have Its Cake and Eat It Too

October 7, 2013 by Christin Bucci

Taxpayers do not be fooled! The government shutdown is not a snow day for taxpayers. While tax courts are closed for the time being, federal courts remain open and taxpayers must comply with important deadlines because they will be upheld by the Internal Revenue Service.

Approximately 85,000 IRS employees have been sidelined by the government shutdown. What does this mean for you, the taxpayer? First the good news: IRS audits and examinations have been temporarily placed on hold. These are sure to continue as soon as the U.S. government figures out their appropriations hold, so don't celebrate just yet.

Your IRS representative has likely halted correspondence, but will pick it back up once the shutdown has ended. So, don't erase the number of your tax attorney just yet. Now for the not so good news: Until the government is once again fully operative no further tax refunds will be issued for 2012. Tax returns are still due by October 15, 2013 and payments must be made.

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Regarding Transparency: Offshore Bank Account Holders Beware

October 4, 2013 by Christin Bucci

It's a common joke that if you have money, you can literally get away with murder. While this is the obvious case in a John Grisham novel or blockbuster film where financial crimes are traced to the darkest alleys of Gotham City, it somehow seemed to be the case in real life too where the guy with the offshore bank account ended up on a beach somewhere in Bermuda. I have little doubt that this type of clean getaway after the perpetration of a massive financial crime happened in the past.

Actually, as a lawyer who specializes in tax controversy, i know it's true. But, know this. Those days are over, as is bank secrecy. Before the age of wireless communication and the World Wide Web, how could you find the person who stripped your accounts dry, stole your business out from under you, or hid money that was rightfully yours? All that was left was someone's sad paper trail and a couple of witnesses - That is how the guy ends up in Bermuda by the way.

You would assume that it must be a little more difficult to scam the government out of money, meaning they must have some greater sophistication than the average Joe to find the truth about the location of money that legally belongs to them. Even with the tracking devices that technology affords us today, the IRS is no CIA - just a bunch of guys and gals sifting through large amounts of bank statements, looking for a hole in the stack.


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Tips for Taxpayers in Responding to the IRS's Request Electronic Files in an IRS Audit

February 14, 2013 by Christin Bucci

During an IRS tax audit of your South Florida business, do you have to give the IRS your electronic files when the auditor requests the entire original backup of the QuickBooks file?

As discussed in our previous Florida Tax Attorney Blog on this subject, the IRS has expansive authority in requesting electronic files and software from you, the taxpayer, during an examination. These electronic files can include the original backup files of electronic accounting software, such as Quickbooks.

While this authority has been challenged by taxpayers and practitioners alike, it has been done so to no avail. While you must be responsive to the IRS's requests, often in the form of an Information Document Request or IDR, during an audit, you must also take care to provide no more data than the IRS's request reasonably covers.

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Can the IRS Request Your QuickBooks Files?

January 17, 2013 by Christin Bucci

Do South Florida business owners have to turn over their business accounting software files in an IRS audit? As many taxpayers know in the IRS examination of tax returns over the past few years, the IRS has increasingly requested the electronic files of accounting programs, such as QuickBooks or Peachtree.

However, whether or not an IRS auditor's request for electronic files was proper has been increasingly questioned by taxpayers and tax practitioners. In response, the IRS announced that it was officially expanding its audit capabilities by training its agents to be proficient in auditing information from files of the accounting software often used by small businesses in October of 2010. The IRS also encouraged revenue agents to start requesting electronic files from taxpayers and practitioners during audits.

The IRS cites the following authority in support of a revenue agent's request for original backup files: IRC Section 6001, Treasury Regulation Section 1.6001-1(a), Revenue Ruling 71-20, and Revenue Procedure 98-25. The IRS argues that all of the aforementioned give the IRS broad authority to examine electronic records in order to establish the taxpayer's correct tax liability. In particular, Treasury Regulation Section 1.6001-1(e) requires the taxpayer to make these records available "for inspection." Additionally, Revenue Procedure 98-25 clarified that the IRS has a right to electronic records.

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