Sheehan Law

Patrick T. Sheehan & Associates is a law firm that solves IRS problems for indivuals or businesses. Elmhurst, IL · http://sheehan-law.com

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US States with the Highest and Lowest Per Capita State Income Taxes.

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Trump Paid About $38 Million In Federal Taxes In 2005, Leaked Returns Say

A two-page portion of his return shows he earned about $150 million, and would have paid less in taxes, but for the alternative minimum. The White House said the returns were "illegally published."

Unlike other recent presidents, Trump has steadfastly refused to release his tax returns, saying he was under federal audit, which has led to enormous speculation about how much he really earns and where he gets his money.

The two-page return doesn’t really answer many questions, but does begin to shed a little light on Trump’s finances.

[sheehanlaw]

Recent Revisions to the Internal Revenue Manual Deny Most Face-to-Face Hearings

As tax practitioners, it is our job to ask the IRS for relief for our clients.  Relief can include a request for an installment agreement, a request for penalty abatement, a request for innocent spouse relief or an Offer in Compromise where you cut a deal with the IRS.

When a request for relief is denied, we routinely file an appeal with the IRS Appeals Division asking for further review of our request for relief.  We also routinely ask for a face-to-face hearing with a local Appeals Officer.  We have found that a face-to-face hearing is far more productive than a teleconference because we can cover more ground in a face-to-face hearing.

Further, a personal touch lends more credibility to our taxpayer regarding the relief that we are seeking.  Unfortunately, the Internal Revenue Manual was recently revised to state that virtually all conferences should be held via telephone and that virtually all face-to-face hearings will no longer be allowed.

The IRS took this step in order to spread the caseload evenly across the United States and to take advantage of technology to reduce costs, especially because the IRS is currently understaffed and is experiencing its own budget woes.  There are exceptions to this rule.

Face-to-face appeals are allowed when there are substantial books and records to review, the Appeals Officer cannot judge the credibility of the taxpayer without an in-person conference, the taxpayer has special needs that can only be accommodated with an in-person conference, there are numerous conference participants or the Internal Revenue Manual specifically calls for an in-person conference.

We are firmly against the revised Internal Revenue Manual because we believe that face-to-face appeals are far more productive for our clients in seeking the relief to which they are entitled.

Do you have an IRS problem?  Contact us, we can help.  Call us before the IRS calls you!®

[sheehanlaw]

Trump’s 2-For-1 Executive Order Shakes Up the IRS

Virtually all governmental agencies have a bewildering set of regulations that must be followed, and the IRS is no exception.

On January 30, 2017, President Donald Trump signed an executive order that requires all federal agencies to identify two regulations to repeal for every new regulation it wishes to impose.  This executive order follows a January 20, 2017, memo from the White House freezing all new and proposed regulations.

That memo has already caused the IRS to pull back on some of its proposed regulations.  Although Trump’s executive order is designed to streamline the running of governmental agencies and its effect on that agency’s “customers,” it will certainly cause many headaches for governmental agencies, including the IRS.

There are specific exceptions to the executive order including regulations pertaining to the military, national security, foreign affairs, agency management and personnel.  In our ever-changing society, especially with modern technology, new rules must be put into place to accommodate these changes.

Although perhaps good-intentioned, we feel that requiring an agency to repeal two regulations for every one it proposes is short-sighted.  Only time will tell if Trump’s executive order is good or bad.  What do you think?

Do you owe money to the IRS or have unfiled tax returns?  Contact us, we can help.  

[sheehanlaw]

Should a Discharged Student Loan Be Treated as Income on Your Tax Return

Generally speaking, when you are relieved of a debt outside of bankruptcy, such as when a bank forgives a mortgage, you may experience forgiveness of indebtedness income.

It is kind of counterintuitive to think that forgiveness of debt can lead to “phantom income” on your tax return, especially because those funds were not paid to you as the time the debt was forgiven.  However, the law sets outincome tax consequences to somebody that receives a discharge of their debt.

There are certain exceptions to this provision, including the insolvency exclusion.  Generally speaking, if you were insolvent immediately before the forgiveness of indebtedness, and if you were still insolvent immediately after the forgiveness of indebtedness, the law allows you to exclude the discharged amounts as income on your tax return.

To learn more about how to report a discharged student loan on your tax return, visit our blog. 

[sheehanlaw]

President Trump’s Taxes Continue to Stir Controversy

President Trump has consistently refused to release his tax returns, halting a 40-year trend of Presidents and Presidential candidates who have released their tax returns to the public.

Trump has continuously claimed that he is not allowed to release his tax returns as a result of a routine IRS audit, a statement that is simply not true. On January 22, 2017, White House aide Kellyanne Conway appeared on ABC’sThis Week With George Stephanopoulos and stated President Trump will not release copies of his tax returns because voters are more focused on their own tax returns. Conway was specifically responding to an online White House petition signed by more than 500,000 people demanding that the President release his tax returns.

The White House website allows online petitions initiated by the public where, if it receives at least 100,000 signatures within 30 days, a response from the White House is guaranteed within 60 days. Conway stated that “he’s not going to release his tax returns. We litigated this all through the election. People didn’t care. They voted for him.”

To learn more about the petition demanding the President release his tax returns, visit our blog.

[sheehanlaw]

New Tax Scam Targets Tax Professionals

The IRS has recently warned of a new scam that targets tax professionals where cyber criminals pose as clients soliciting services from tax professionals.  The scammers try to get the tax professional to turn over information to them or installs malware on the tax professional’s computers so that the scammer can steal confidential tax information directly from the tax professional.

This is how the scammers work: the scammer first sends an email that looks like a real solicitation from a potential client looking for a tax return preparer to file taxes.  Being a diligent entrepreneur, the tax professional will likely respond to the email, and the scammer then sends a second email that either has an embedded web address or contains an attachment that the scammer says contains his or her tax information.

To learn more about this latest tax scam, visit our blog.

[sheehanlaw]

IRS Whistleblower Report Lists More Awards Paid than Ever

The IRS Whistleblower Program pays awards to people who provide specific credible information to the IRS regarding taxpayers that have not fully paid their taxes or who have committed fraud or evasion on their tax returns.

There are two prongs to the Whistleblower Program.  The first prong pays a percentage of the proceeds collected as a result of the whistleblower information, the amount of which is solely within the IRS’ discretion.  Under the first prong of the Whistleblower Program during fiscal 2016, the IRS paid 418 awards to whistleblowers in the gross amount of $61 million, a reduction in money paid out from the prior year, but an increase in the number of awards paid.  In fiscal 2015, the IRS paid $103 million to whistleblowers.

The other prong requires the IRS to pay out between 15% and 30% of the proceeds collected if the taxpayer in issue meets the required criteria ($2 million in dispute for taxpayers with gross income of more than $200,000.00).  Under the second prong of the Whistleblower Program, the IRS paid a total of 18 awards in fiscal 2016, another reduction over the prior year.  In fiscal 2015, the IRS paid 19 awards.

Do you have credible information regarding a taxpayer that has underpaid his or her tax liability or has committed fraud or evasion on their tax returns?  Contact us, we can help.  Call us before the IRS calls you!®

[sheehanlaw]

Presidential Conflicts of Interest Act of 2017 Aimed Squarely at President Trump

On January 9, 2017, Senator Elizabeth Warren, D-Mass., introduced the Presidential Conflicts of Interest Act of 2017that, if passed, would require the President, Vice-President, spouses and minor or dependent children to divest themselves of all interests that may or will create financial conflicts of interest.

The law would require that those assets be placed into a blind trust that would be managed by an independent Trustee who would sell all of those assets and place the proceeds in conflict-free holdings.  The law would also require the disclosure of tax return information from the President and any future Presidential candidates.

The legislation would also bar Presidential appointees from participating in matters that directly involve the financial interests of the President, the President’s spouse or businesses controlled by either or both of them.  The purpose of this legislation is to provide clarity and transparency regarding the President’s investments, along with his spouse, family members and Presidential appointees, to ensure that there is no self-dealing.

We believe that this legislation is good for our country.  What do you think?

Visit our blog for more information!

[sheehanlaw]

IRS Cracks Down on Unpaid Employment Tax

Failing to file a tax return is also a crime, a misdemeanor punishable by imprisonment for up to one year.  However, someone who willfully fails to collect, truthfully account for and pay over withholding tax can be found guilty of a felony, the punishment of which can include imprisonment for a period of greater than one year.

The IRS and the Department of Justice are now vigorously pursuing employment tax violations and are pursuing stricter civil and criminal enforcement procedures.  Further, the United States Department of Justice Tax Division removed the words “infrequently prosecuted” from the U.S. Sentencing Guidelines Manual for Internal Revenue Code §7202 which provides for the criminal prosecution of any person who willfully fails to comply with his or her statutory obligation to collect, account for and pay over income tax withholding, Social Security tax and Medicare tax.

To learn more about the IRS’ crack down on unpaid employment tax, check out our blog.

[sheehanlaw]

Chicago Tax Lawyer Patrick T. Sheehan Scores Double Win at the IRS

A recent business client of Chicago Tax Attorney Patrick T. Sheehan & Associates had not filed its Forms W-2 or W-3 with the Social Security Administration for one year.  As a result, the IRS assessed a Civil Penalty against our client in the shockingly large amount of $50,900.

Our client also timely mailed a federal tax deposit to the IRS paying its Form 941 liability for one quarter in full.  However, the IRS took the position that the federal tax deposit should have been made electronically via its online payment system (EFTPS) instead of being mailed to the IRS.

As a result, the IRS assessed a failure to make a proper federal tax deposit penalty against our client of over $124,000!  We filed two separate Requests for Penalty Abatement Based Upon the Doctrine of Reasonable Cause with the IRS seeking the removal of these penalties.

To learn how we were ale to get abatements totaling over $175,000 for our client, visit our blog.

[sheehanlaw]

Actor Alec Baldwin Offers to Stop Impersonating Donald Trump if Trump Releases his Tax Returns

For 40 years, our presidents have released their tax returns to the public. Donald Trump reverses this trend as he refuses to release his tax returns. Saturday Night Live actor Alec Baldwin says he will stop impersonating Trump when Trump releases his tax returns. Click here to read more!

[sheehanlaw]

2017 Tax Filing Season Begins Jan. 23, 2017

The IRS announced that the upcoming filing season for 2016 tax returns will start on January 23, 2017. The deadline has also been extended to April 18th, 2017 as opposed to April 15th, 2017. Click here for more details!

[sheehanlaw]

What Changes are Coming for Tax Law in 2017?

With the new year approaching and with the election of a new president, many tax changes are going to go into effect that you as a tax payer will want to be aware of. Check out our blog to read what tax law changes are ahead of us in 2017.

[sheehanlaw]

IRS Scam Phone Calls on the Decline

Good news! IRS scam phone calls are significantly declining. The U.S. government unsealed an indictment targeting scam call centers in India which ultimately resulted in a significant drop in fraudulent calls. Click here to read more!

[sheehanlaw]

Tax Reform Included in President-Elect Trump’s First 100 Days

President-elect Donald Trump has big plans for his first 100 days in office, including comprehensive tax reform. Some of the proposed changes include: a decrease in the number of individual tax brackets, a reduction or elimination of deductions for wealthy taxpayers, and the elimination of tax incentives for companies that move jobs or headquarters overseas.

Visit our blog for more information on Trump's proposed tax reforms.