What can a tax attorney do?

What Can a Tax Attorney Do?

When you are experiencing IRS tax problems, the one professional you should turn to is a tax attorney.  Don’t bother with CPA’s, EA’s (enrolled agents) or tax relief firms as they most of the time make your IRS problems worse.  Tax attorneys are well-versed in tax law and know what to do to effectively resolve any legal tax issue.

Hiring a tax attorney can be indispensable to your case, but many taxpayers want the low-down of what exactly they can do.

Attorney client confidentiality is what a tax attorney can do.

This is a huge bonus and one aspect that many taxpayers feel is extremely important…  CONFIDENTIALITY.  All attorneys are bound by the attorney client privilege and attorney client confidentiality.  This means that all communication between you and your tax attorney is to be kept secret.

An attorney cannot be forced to disclose what they know, except in certain rare circumstances (i.e., you are about to commit a murder). Therefore, you can feel free to discuss all the details you want and reveal potential incriminating information without the fear that it can be held against you.

Experience and vast knowledge of tax law is what a tax attorney can do.

Tax attorneys are lawyers who have specific knowledge with regard to tax law.  Tax law encompasses the IRS code (statutes), treasury regulations, revenue rulings, tax treaties, tax case law, tax opinion letters and private letter rulings.   Not all can be relied upon as precedent though.  A tax attorney can use all this vast knowledge to handle complex legal issues associated with your tax problem.

Of course, you can represent yourself before the IRS, but it’s not a good idea.  Tax law is one of the most challenging and complex areas of the law. The Internal Revenue Code is rarely clear about anything and is constantly changing.  A tax attorney can keep you updated on all the changes and guide you through the ambiguity, coming up with the best solutions to solve your IRS problems.

A tax attorney has extensive legal knowledge to assist or resolve the following tax and business-related tax issues:

• tax audit representation
• payment plan negotiation
• offer in compromise (settlement) of your tax debt for less than you owe
• wage garnishment, bank levy and tax lien release
• foreign reporting of income
• tax strategy to maximize your deductions and lower your income
• tax fraud and tax evasion
• identity theft
• business entity selection and set-up
• U.S. Tax Court representation (litigation)
• estate planning tax strategies
• drafting tax opinion letters
• other issues pertaining to analysis of the IRS code, for example, how are Bitcoin and other cryptocurrencies taxed?
• all other tax resolution options/strategies with regard to the IRS

Extensive IRS experience

Dealing with the IRS can be extremely taxing and complicated. Many of the departments don’t even talk to one another leaving a taxpayer pretty lost at times and extremely frustrated.  A tax lawyer can help take you out of the game and maneuver quickly and efficiently to get you the most efficient and advantageous results.

Also, a tax attorney will know how to approach each IRS representative, tax auditor, offer in compromise officer, revenue agent or revenue officer.  IRS personality types can be pretty tricky.  It is super important to know how to handle each one successfully.  It can make all the difference in obtaining a positive result.

Expert negotiation skills

With a tax attorney, you can expect advanced negotiating skills.  Having this special skill set is invaluable as attorneys are trained to be master negotiators from the time they are in law school.  For example, it can mean the difference between obtaining a low or high settlement offer when applying for an offer in compromise. This negotiation expertise provides a lot of assurance so that you will get the best deal possible.

Highly efficient and hard working

A tax lawyer can do in a month what a tax relief company may do in a year or even more.   And, it will probably cost you less with an attorney in the long run.  Not only does a tax attorney know what needs to be done, but also when and how the problem can be resolved fast.

Unfortunately, the goal of a tax relief company is to keep putting off the taxpayer by doing as little as possible, so that they can bill for a longer period of time.  Also, with a tax relief company, you rarely talk to an attorney, if they even have one on staff.  They generally lie about one being on staff to get you to commit to their contract.  So, watch out!

Taxpayers needing assistance in dealing with IRS tax problems should seek the advice of a knowledgeable tax attorney.  The San Diego Tax Attorneys at Delia Law have many years of tax resolution experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation for tax resolution at (619) 639-3336. We look forward to helping you.

This blog post is not intended as legal advice and should be considered general information only addressing what a tax attorney can do for you!

 

Keywords:  Tax Attorney, Tax Lawyer, Tax Relief Firms, Tax Relief Company, IRS problems, IRS Tax Problems

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Bitcoin tax tips for US citizens –What is going to happen?

Bitcoin Tax tips and the IRS

There is no doubt that more attention is being garnered by the IRS with regard to Bitcoin, Ethereum and other cryptocurrency transactions.  According to Google Trends search data, the rising price of Bitcoin and other digital currencies, the increasing interest, popularity and growth will only continue.

Due to this significant interest, there are many questions regarding the tax consequences of purchasing, selling, exchanging and holding digital currencies.  Be aware of these many Bitcoin aspects as you don’t want to be caught having tax problems with the IRS.

How does Bitcoin or cryptocurrencies work?

Cryptocurrencies are digital or virtual currencies that can be shared instantly online, free from government or corporate interference, also known as decentralized blockchain.  Money is made by buying and selling Bitcoin on a crypto currency exchange.  In doing so, an investor converts wealth from bitcoin to U.S. dollars to other national currencies, back to dollars or Bitcoin.

Some of the advantages of cryptocurrencies, such as Bitcoin, include:

• User anonymity (actually bitcoin keeps all transactions on a ledger so IRS can use blockchain to follow transactions)
• No third party interruptions (unless you use  a third party wallet)
• Non-taxable purchases
• Low transaction fees  (bitcoin fees are getting higher)
• Not bound by exchange rates or interest rates
• Mobile payments
• Transactions take place at the same speed, regardless of where sender and receiver are located (but dependant on the miners)
• Cannot be counterfeited and transactions cannot be reversed arbitrarily

See Investopedia: http://ift.tt/2jpCv34; See also http://ift.tt/2EuQ2iI.

How is Bitcoin taxed?

Bitcoin is definitely global, but taxation issues differ from country to country.  In March of 2014, the IRS recognized virtual currency by publishing guidance found in IRS Notice 2014-21.  It established that Bitcoin and other cryptocurrencies are treated as property (not as currency) for U.S. Federal tax purposes and that general rules for property transactions apply.

Due to this classification, everyone that deals with Bitcoin will be labeled basically as an investor and must deal with the complex and sometimes grueling reporting requirements and significant ensuing taxes for its use.

Thus, the IRS is treating the income or gains from the sale of a virtual currency, such as Bitcoin, as a capital asset, subject to either short-term (ordinary income tax rates) or long term capital gains tax rates, if the asset is held greater than twelve months (15% or 20% tax rates based on income).

Other general tax principles apply to bitcoin in the following ways as cited by the IRS:

• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
• Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
• The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
• A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

Bitcoin Tax tips for Reporting to the IRS

For most investments, we receive a 1099 showing taxable gains.  This is where things get dicey.  For Bitcoin and cryptocurrency transactions, there are no official notices given.  It is up to the individual investor to report the transactions.  Taxpayers must generally file form 8949 along with 1040 Schedule D (see also Schedule D instructions) when reporting Bitcoin and other cryptocurrency transactions.

Tax reporting compliance is extremely low, however.  Case in point, out of 480,000 investors utilizing a website called Coinbase, only 802 investors reported their gains or losses to the IRS between 2013-2015.  Due to this lack of reporting, the IRS was able to force Coinbase via Court Order to hand over 14,000 of these investor records from 2013-2015.

So, be sure to report as the IRS is becoming very aware of this non-compliance where you could potentially be viewed as engaging in tax fraud.

What does the future hold for Bitcoin

The IRS is definitely tweaking more of the IRS code to take advantage of Bitcoin and other cryptocurrencies.  As described in this Fortune article dated December 21, 2017, the IRS closed the following “loophole” with regard to cryptocurrencies:

“The tax act in Sec. 13303 amends IRC Section 1031 (a)(1) to delete “property” and replace it with “real property” … So, you can see that now I can no longer take the position that my Bitcoin to Litecoin exchange was a like kind one under Sec. 1031, and I have to recognize the gain when I do it.”

Unfortunately, the IRS wants its cut so be sure to keep abreast of where they stand on cryptocurrencies.  Be sure to look into their latest development:  IRS deployment of special software to identify Bitcoin tax cheats.

Cryptocurrency investments, such as bitcoin, are no doubt risky and highly volatile.  It is important to stay ahead of the game and especially the tax changes in this area and seek the advice of a knowledgeable tax attorney.  The San Diego Tax Attorneys at Delia Law have many years of tax experience and will competently represent you before the IRS.  Please call for a no-cost tax attorney consultation at (619) 639-3336. We look forward to helping you.

This Bitcoin tax tips blog post is not intended as legal advice and should be considered general information only.

 

Keywords:  Bitcoin, cryptocurrencies, digital currency, virtual currency, tax problems

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