Tony Dennison Esq. can handle Federal Tax cases in:

 Alabama Alaska American Samoa Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Guam Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Northern Marianas Islands Ohio Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Virgin Islands Washington West Virginia Wisconsin and Wyoming

 

 

CASE EXAMPLES

Case #1. A client  purchased a Corporation. Prior to this purchase date, the previous owner of the Corporation committed tax fraud.

The IRS came after my client for $85,000 in penalties and back taxes.

The IRS was vehement that the liabilities of the Corporation transferred to the new owner and they would not budge. Where it is generally true that corporate liabilities do transfer to the new owner, I found a U.S. Supreme Court case which, based on the facts and the law, allowed me to defend my client from these penalties and taxes. I wrote a lengthy legal memorandum that the IRS simply could not refute.

In the end, the IRS owned my client $34. This would not have happened if my client had hired an accountant, and quite possibly not if he had hired a regular attorney. The issues were very complex and the answer was well hidden. The IRS had no idea of this answer, and without my work, the IRS would not have been educated, and the client would have been bankrupt.

 

Case #2. A person using an accountant rolled over his retirement plan. The person had 60 days from the time he received his check to rollover the funds and avoid penalties. He rolled the funds over in 58 days.

The IRS was under the impression that the law required that the rollover take place with 60 days of distribution and not when the check was received. The IRS contacted this person 3 years later with a bill for $76,000.

He went back to his accountant. The accountant agreed with the IRS. He missed his chance to write a short Abatement Memo, which could have resolved the issue, he missed the chance to file an Appeals Memo, which would have solved the problem, and he was quickly ignoring his chance to file a Tax Court Petition. Once contacted, I filed the Petition. If the time had passed for filing that Petition, the person would have no choice but to pay the $76,000. In the end, after filing in Federal Court, the IRS completely surrendered because they knew they could not win.

 MORE EXAMPLES TO COME:

About the Tax Attorney

Tony Dennison received his first law degree (J.D). from the Baltimore School of Law. He received his second law degree (LL.M. in Taxation) from the University of Miami’s Graduate School in Taxation, ranked 5^th in the world for their Taxation LL.M. program.

He has worked as the General Counsel for the Aerospace Corporation 4Frontiers; he was a Florida State Attorney; he has experience from Bechtel Power Corporation, Allied Signal Aerospace, and Axent Technologies Inc.

Tony’s first tax case was in 1999 while under special orders from the U.S. Treasury Department via the Internal Revenue Service.

He is  licensed to practice in Florida State Courts, Florida Federal Court for the Middle District, Washington D.C., the United States Tax Court, the Court of Federal Claims, the Florida Department of Revenue and, the Internal Revenue Service.

Most of his cases come via referrals from attorneys and accountants that have clients with problems beyond their capabilities. In a time when tax professionals appear to attempt settlement at the first sign of controversy, Tony only capitulates to the Government as a last resort.

He has dealt with all types of tax issues for individuals, large and small corporations, civil and criminal.

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Who Needs a Tax Attorney?

Whatever problem you have with the IRS, there are most likely legal arguments and defenses to help you. When you attempt to deal with the IRS alone, you are in trouble, and your accountant may not be the right option. IRS employees are trained to take your money whether you owe it or not. They are trained to get information from you that you are better off not giving them. What seems like an explanation to you, may very well be considered an admission to them. Before you know it, you’ve explained yourself in to a box and you are out of options.

The IRS decides who can represent people before the IRS, and they allow non-attorneys to do so. When you hire a non-attorney (CPA, Enrolled Agent) to represent you in a legal matter, you are playing in to the hands of the IRS. Whatever problem you have with the IRS, there are most likely legal arguments and defenses to help you. Non-attorneys are not prepared to deal with this. Non-attorneys  file forms  provided by the IRS, and then tell you to pay what the IRS tells them you can pay.

Don’t be fooled by those silly “pennies on the dollar” commercials, they are scams! There is no one on your side when you hire a non-attorney to protect you from the IRS.

Also, a tax attorney is not just a lawyer. A tax attorney is just that, a tax attorney. Tax attorneys have 2 separate law degrees; the second is called a Master of Laws in Taxation. The first law degree is the same as any regular attorney, the second law degree is specifically in the field of taxation, and is the most prestigious law degree there is; known for its difficulty in both being admitted to an LL.M. program, and then of course, completing the arduous course work. The Tax code is over 97,000 pages, the largest most complex statute in the history of the world. Make sure your representative is a real tax attorney (LL.M.).

A real tax attorney will analyze your case, perform proper, many times complex legal research; utilizing tax statutes, legislative histories, Treasury regulations, IRS rulings and court decisions; and then plan a proper attack. Non-attorneys simply rollover with your money.  

Your case may need to be heard in an IRS office, Federal Court, Court of Federal Claims, the U.S. Tax Court. Only an attorney is allowed to represent you in all of these venues. When you use a non-attorney, your only venue may be the IRS office. The IRS office may be the least impartial venue for your issue. Think about it.

A good tax attorney will interpret your position and use established legal precedent to support a particular argument or defense. Many times the IRS is just wrong. Many IRS publications are incorrect, and the law protects their mistakes, not holding them to their own statements, whether in writing or even orally. A tax attorney can decipher the truth, educate the IRS employees, and ensure that your taxes are given proper treatment.

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When Should You Contact a Tax Attorney?

Although you should contact a tax attorney as soon as you receive ANY contact from the IRS, it is vitally important that you CALL A TAX ATTORNEY AS SOON AS YOU RECEIVE, A NOTICE OF LIEN, A NOTICE OF LEVY, A NOTICE OF DEFICINCY, A NOTICE OF CHANGE IN YOUR ACCOUNT, A NOTICE OF AUDIT. All of these notices have time sensitive remedies that must be dealt with immediately to avoid losing your rights and defenses under the law!

Time is of the essence more with the IRS then in just about any other legal issue. Not only is time an issue in increasing your penalty and interest amounts, but many of your legitimate defenses and options dissolve as time goes on. When you get a proposed adjustment to your taxes, you have a very limited time to file a legal memorandum called an abatement letter. If this time passes, you will get a decision by the IRS concerning these adjustments. When you receive this decision, you have a very limited time to file for an appeals conference with accompanying legal memorandum. If this time passes without action, you will receive a “Deficiency Notice”. When you receive a deficiency notice, the time again ticks very rapidly toward a file assessment. If you do not take action quickly, the IRS's decision will become final. All of this is true even if you are completely in the right, you don’t owe anything, and the IRS is wrong. If all these time frames have passed, you still will have defenses and options, but they are limited to post assessment criteria. This means, and this point, “You Owe the Money” under the law, you can now only find reasons not to pay the IRS, the time to prove you never owed the money is pretty much passed.

It is certainly not the end of the world if these timeframes have passed, BUT it is much better for you if you act immediately and preserve all of your weapons.

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Is It Cheaper For Me to Call My C.P.A., Enrolled Agent, Regular Attorney or Accountant?

They are restricted in where they are allowed to represent people, and this greatly limits your defenses. They are not trained in law, and therefore may not be able to, one, know if the IRS is in error, and two educate the IRS as to the errors of their ways.

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Types Of Tax Problems

FAILURE TO PAY TAX:

Separate  penalties apply for failing to pay and failing to file. The failure to pay  penalty the “gentler” of the two, running at 1/2% for each month (or part of a month) the payment is late. For example, if payment is due April 15 and is made May 20, the  penalty is 1% (1/2% times 2 months (or partial months). The maximum  penalty is 25%.

The failure to pay penalty is based on the amount shown as due on the return (less credits for amounts already paid, e.g., via withholding or estimated payments), even if the actual tax bill turns out to be higher. On the other hand, if the actual tax bill turns out to be lower, the penalty is based on the lower amount.

For example, if your payment is two months late and your return shows that you owe $5,000, the penalty is 1% (see above), which equals $50. If you are audited and your tax bill increases by another $1,000, the failure to pay penalty is not increased because it's based on the amount shown on the return as due. On the other hand, if the audit reveals that your tax due should have only been $4,000, the penalty is reduced to $40.

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FAILURE TO FILE:

The failure to file penalty, also known as the  delinquency penalty, runs at the more severe rate of 5% per month (or partial month) of lateness to a maximum of 25%. If you obtain an extension for your filing due date, you are not filing late unless you miss the extended due date. However, a filing extension does not apply to your responsibility for payment.

If the 1/2% failure to pay penalty and the failure to file penalty both apply, the failure to file penalty drops to 4.5% per month (or part) so the total combined penalty remains at 5%. The maximum combined penalty for the first five months is 25%. Thereafter the failure to pay penalty can continue at 1/2% per month for 45 more months (an additional 22.5%). Thus, the combined  penalties can reach a total of 47.5% over time. But this does not include interest which compounds daily, and continues for ever.

The failure to file penalty is also more severe in that it is based on the amount required to be shown on the return, and not just the amount shown as due. (Credit is given for amounts paid, for example, via withholding or estimated payments. So if no amount is owed, there is no penalty for late filing.) Thus, for example, if a return is filed three months late showing $5,000 owed (after payment credits), the combined  penalties would be 15%, which equals $750. If the actual tax liability is later determined to be an additional $1,000, the failure to file penalty (4.5% × 3 = 13.5%) would also apply to this amount for an additional $135 in penalties.

A minimum failure to file penalty will also apply if you file your return more than 60 days late. In this case, the failure to file penalty is at least $100. Even here, however, if you owe no taxes, there is no penalty.

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CIVIL FRAUD:

Due to its steep rate, the civil fraud penalty is one of the most powerful tools that IRS has. It applies if any part of a tax underpayment is due to fraud, and the penalty equals 75% of that portion of the underpayment attributable to fraud. Although IRS has the burden of proving fraud by clear and convincing evidence, if it shows that any portion of an underpayment is due to fraud, the entire underpayment is treated as attributable to fraud except for any portion that the taxpayer shows (by a preponderance of the evidence) not to be so attributable.

Other adverse results also flow from a civil fraud determination. For example, no time limit exists on the assessment and collection of tax if a fraudulent return is filed. Likewise, a return subject to the civil fraud penalty is treated as fraudulent for bankruptcy purposes. As a result, taxes shown on such a return are not normally discharged in a bankruptcy proceeding.

Although civil fraud is not statutory defined, some courts have defined it as an actual and deliberate, or willful, wrongdoing with specific intent to evade a tax believed to be owed. Fraudulent intent is rarely shown by a single act or by direct proof of a taxpayer's intent. Instead, it's usually shown by looking at all of the facts and circumstances.

A separate fraudulent failure to file penalty, imposed at a maximum rate of 75%, may apply to late-filed or non-filed returns.

Certain constitutional defenses to the civil fraud penalty, including double jeopardy, have been rejected because the penalty is civil and not criminal in nature. However, as with many other tax penalties, the civil fraud penalty can be avoided by showing legal reasons. Taxpayers have often been successful in avoiding the civil fraud penalty.

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REASONABLE CAUSE:

Many if not all  penalties may be excused by IRS if your lateness is due to “reasonable cause”. This is a legal term and requires specifics of your case in order to apply for the “reasonable cause” exception. You can not simply write up reasons YOU believe is a reasonable cause. There are very specific legal guidelines for the definition of  "reasonable cause”.

Interest is assessed at a fluctuating rate announced by the government and compounded daily apart from and in addition to the above penalties.

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TAX LIEN:

Internal Revenue Code section 6321 provides:

Sec. 6321. LIEN FOR TAXES.

If any person liable to pay any tax neglects or refuses to pay the same after demand, the amount (including any interest, additional amount, addition to tax, or assessable penalty, together with any costs that may accrue in addition thereto) shall be a lien in favor of the United States upon all property and rights to property, whether real or personal, belong to such person.

The term "assessment" refers to the statutory assessment made by the Internal Revenue Service (IRS) under 26 U.S.C. § 6201 (that is, the formal recording of the tax in the official books and records of the U.S. Department of the Treasury). Generally, the "person liable to pay any tax" described in section 6321 must pay the tax within ten days of the written notice and demand.[2] If the taxpayer fails to pay the tax within the ten day period, the tax lien arises automatically (i.e., by operation of law), and is effective retroactively to (i.e., arises at) the date of the assessment, even though the ten day period necessarily expires after the assessment date. Internal Revenue Code section 6322 provides:

A tax attorney can find the best, least intrusive way to remove a tax lien. You should contact a tax attorney AS SOON AS YOU RECEIVE ANY TAX LIEN NOTICE…TIME IS OF THE ESSENCE.

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TAX LEVY:

Following a notice of tax lien comes the tax levy. This is where the IRS comes and takes possession of, and sells your house and anything else you may have of value. The fact that you live in an homestead state will not save you or your house. The IRS has the authority to take anyone’s home. There are ways to stop them, but you will need to contact a tax attorney as soon as possible.

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TAX EVASION:

Tax Evasion is the general term for efforts by individuals, firms, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating deductions).

Tax evasion is a crime in almost all countries and subjects the guilty party to fines or imprisonment.

Switzerland is a partial exception. Many acts that would amount to criminal tax evasion in other countries are treated as civil matters in Switzerland. Even dishonestly misreporting income in a tax return is not necessarily considered a crime. Such matters are dealt with in the Swiss tax courts, not the criminal courts. However even in Switzerland, some fraudulent tax conduct is criminal, for example, deliberate falsification of records. Moreover civil tax transgressions may give rise to penalties. So the difference between Switzerland and other countries, while significant, is limited.

In the United States, persons subject to the Internal Revenue Code who earn income by illegal means (gambling, theft, drug trafficking etc.) are required to report unlawful gains as income when filing annual tax returns (see e.g., James v. United States), but they often do not do so, because doing so could serve as an admission of guilt. Suspected lawbreakers, most famously Al Capone, have been charged with tax evasion when there is insufficient evidence to try them for their non-tax related crimes. By contrast: In the UK law enforcement agencies do not generally have access to tax returns and so illegal earnings can supposedly be safely declared but in practice those carrying on criminal activities generally prefer not to do so, and so can sometimes be prosecuted for tax evasion rather than for other crimes.

There is always the possibility of the attempt to evade tax criminal penalties. This charge is a felony and can carry the sentence of 5 years in prison and a fine of $100,000.00 for an individual and $500,000 for a corporation. This charge can be applied to a failure to file case if additional steps are taken in conjunction with a failure to file that demonstrates an attempt to evade the payment of tax. Examples of these steps are as follows: keeping double books, false entries or alterations to books, false documents or invoices, destruction of documents or books, concealing assets, covering up sources of income, transactions that avoid book entries, conduct likely to mislead. It is important to realize that the I.R.S. decides when actions are considered reason to initiate criminal investigations and the taxpayer is not warned. It is very important that a trained professional be the one in communication with the I.R.S. as soon as a conflict arises.

 

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MONEY LAUNDERING AND WIRE/MAIL FRAUD:

Anyone faced with any criminal tax charge will most likely also be charged with money laundering or wire/mail fraud. This is because most tax crimes are conducted by the use of these other crimes. These other crimes are usually committed without the tax payers knowledge.

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Where Tax Problems Are Handled:

Most tax problems are handled with the IRS office via audit, appeals conferences and final agreements. Some are dealt with in the U.S. Tax court, some in the plain Federal Court, and some in the Court of Federal Claims. Where you go will depend on the facts of your case, and how quickly you have contacted proper representation.

 

MORE TO COME:

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History of the Internal Revenue Service IRS

Origin
The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment
In 1913, Wyoming ratified the 16^th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16^th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

A New Name
In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.

Today’s IRS Organization The IRS Restructuring and Reform Act of 1998 prompted the most comprehensive reorganization and modernization of IRS in nearly half a century. The IRS reorganized itself to closely resemble the private sector model of organizing around customers with similar needs.

To support its structure and ensure accountability, the IRS is divided into three commissioner-level organizations:

Commissioner

Specialized IRS units report directly to the Commissioner’s office. The IRS Chief Counsel also reports to the Treasury General Counsel on certain matters.

• Commissioner, Internal Revenue — Mark W. Everson
• IRS Chief Counsel — Donald L. Korb
• Appeals — Sarah Hall Ingram, Chief
• Taxpayer Advocate Service — Nina E. Olson, National Taxpayer Advocate
• Equal Employment Opportunity and Diversity — Diane Crothers, Chief
• Research, Analysis, and Statistics — Mark Mazur, Director
• Communications and Liaison — Frank Keith, Chief

Deputy Commissioner for Services and Enforcement

The Deputy Commissioner reports directly to the Commissioner and oversees the four primary operating divisions and other service and enforcement functions:

• Deputy Commissioner for Services and Enforcement — Kevin Brown
• Wage and Investment Division — Richard J. Morgante, Commissioner
• Large and Mid-Size Business Division — Deborah M. Nolan, Commissioner
• Small Business/Self Employed Division — Kathy Petronchak, Commissioner
• Tax Exempt and Government Entities Division — Steven T. Miller, Commissioner
• Criminal Investigation — Vacant
• Office of Professional Responsibility — Stephen Whitlock, Acting Director

Deputy Commissioner for Operations Support

The Deputy Commissioner reports directly to the Commissioner and oversees the integrated IRS support functions, facilitating economy of scale efficiencies and better business practices:

• Deputy Commissioner for Operations Support — Linda Stiff
• Modernization and Information Technology Services — Richard A. Spires, Chief Information Officer
• Agency-Wide Shared Services — James P. Falcone, Chief
• Mission Assurance and Security Services — Daniel Galik, Chief
• Human Capital Officer — Robert Buggs, Chief

Chief Financial Officer — Janice J. Lambert, Chief