Taxation

ablan-kioskCOLLATERAL AGREEMENTS

Collateral agreements allow you an opportunity to pay your tax liability over time. These can be a very effective bargaining tool. These can be filed simultaneously with the offer in compromise. We, at the Michael Ablan Law Firm in La Crosse, Wisconsin, La Crescent, Minnesota, or Hayward, Wisconsin usually wait until the IRS solicits a collateral agreement. This signals that this is their last ditch effort to collect a tax liability. This way we can gain some leverage. There are several types of collateral agreements. You include payments from future income, offering to reduce the basis in assets that you have the right to depreciate, agreeing not to carry forward certain losses, and waiving certain deductions that would otherwise be available to you. One of the benefits of a collateral agreement is that you do not have to worry that your income, assets or tax refunds will be subject to Levy or attachment or offset.

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TAX CONTROVERSIES

Attorney Michael Ablan has been admitted to practice before the United States Tax Court since May of 1980. The Tax Court is a non-jury trial court with limited jurisdiction involving controversies over federal income tax, estate or gift taxes and certain excise taxes. The Tax Court hears and decides significantly more tax cases that have substantial legal and economic impact than all of the Federal District Courts or United States Claims Courts. The Tax Court’s rules are unique to this forum. The rules are loosely modeled after the Federal Rules of Civil Procedure. Both Minnesota and Wisconsin state courts have also adopted the principles of the Federal Rules of Civil Procedure. Attorney Ablan’s experience with these Rules of Civil Procedure spans 35 years.

The Chief Counsel’s office represents the Commissioner in the United States Tax Court. Your case is commenced by the filing of a petition. This must be filed within 90 days from the date of mailing of the notice of deficiency. In the petition we, the Michael Ablan Law Firm in La Crosse, Wisconsin, La Crescent, Minnesota, or Hayward, Wisconsin will set forth the amount and nature of all “Assignments of Error.” Oftentimes, the error could be that the Commissioner has not met its burden of proof or the law has been misinterpreted or that the tax procedures have not been adhered to by the IRS. All claims and defenses must be separated by paragraphs in the petition. The Michael Ablan Law Firm will, at that time, file a designation of the place of trial. The Commissioner generally has 60 days after service of the petition to file an answer. The Tax Court requires that this answer be full and complete. The case then proceeds with motion practice and the pretrial discovery of each party’s case. Discovery is done first informally, but if there is some noncompliance, formal discovery is conducted under the supervision of the Tax Court. Another form of discovery is the taxpayers’ right to file for information under the Freedom of Information Act. At the Michael Ablan Law Firm, we first request production of documents held by the IRS. Once this motion and discovery process is completed, most of the cases settle.

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TAX FRAUD DEFENSE

Tax fraud and tax evasion prosecutions cut wide across all sectors of society including political figures, dentists, judges, lawyers, doctors, accountants, construction workers, real estate moguls, restaurateurs, small businesses, big businesses, and various others. These can be based upon a scheme or conspiracy or on a singular intentional act. A tax return is not fraudulent either for civil or criminal purposes whether or not there are taxes due unless there is solid evidence of an attempt to evade or defeat the rightful payment of taxes. What is interesting about the law is that the intent to convert someone else’s property such as in an embezzlement, illegal gambling or racketeering does not by itself rise to the level of tax fraud without the element “attempt to evade or defeat” the rightful payment of taxes. Most taxpayers get into this arena because you attempted to avoid the payment of taxes. Tax avoidance is the process of taking advantage, by lawful means, of all the opportunities provided by the tax laws to eliminate or reduce a particular tax impact. The tax attorney should find all evidence that demonstrates good faith, lack of intent, accident or such other circumstances that demonstrate that the decisions were not intended to deliberately evade the payment of taxes. Tax avoidance is not a crime, nor is it subject to civil fraud penalties. However, even though this theoretical difference exists, on a practical level the line between avoidance and evasion may become blurred. Attorney Michael Ablan has the experience to lawyer these cases and offers a free consultation to those that have been accused of fraud by the Internal Revenue Service. Attorney Michael Ablan has an office in La Crosse, Wisconsin, La Crescent, Minnesota, and Hayward, Wisconsin. It is recommended in these situations that the consultation be conducted in person.

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COLLECTION DUE PROCESS HEARING

If you have not had a chance to formally challenge your assessment or other collection activity, this is your opportunity. Attorney Michael Ablan can assist you in appealing the IRS collection activities to the IRS Office of Appeals. Attorney Michael Ablan can assist you in appealing the IRS collection activities to the IRS Office of Appeals. There are two main procedures – one is Collection Due Process and the other is Collection of Appeals Program (CAP). Some Collection actions qualify for appeal under the Collection Appeals Program (CAP) and some qualify under the Collection Due Process (CDP) appeal. These two programs offer different advantages depending on the facts of your case. The Collection Due Process (CDP) hearing rights are available to you after you have received the Notice of Federal Tax Lien or a Notice of Intent to Levy against assets. CDP is also available if you receive a notice of Jeopardy Levy or a notice of Levy on your State Tax refund. The IRS must give you at least 30 days (see the details below) to claim your rights. However, because seizure of assets is imminent, it is imperative that you contact your lawyer right away. Attorney Michael Ablan will work with you to determine the best course of action both legally and strategically. He will protect your assets from further collection by filing an appropriate CDP request. It is important that you retain and provide your attorney with the exact copy of these notices. This will also give attorney Michael Ablan an opportunity to contact the Collection division to discuss your situation and your payment options and hopefully obtain a quick resolution before filing the CDP. Please see our CAP section. As mentioned, CAP is also available, however, CAP is a final resolution and you cannot take your case to court for review of the decision after it is rendered, like you can with a CDP result. There is an advantage, however, because a CAP can be filed before you receive Notice of Federal Tax Lien or of Intent to Levy. The decision to file a CAP is quite technical and should only be addressed after consultation with a qualified tax attorney. Attorney Michael Ablan recommends the use of CAP when an installment agreement has either been rejected or terminated.

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AUDITS-OFFICE AND FIELD

Here is how to recognize the process that is unfolding before you. The IRS can conduct a field audit or an office audit. An office audit normally requires that you submit specifically requested books and records that address two or three areas on your tax return. Although these tax auditors are not as knowledgeable of the tax law, as for example are revenue agent’s in field who audits, they should not be underestimated. Their expertise is usually very good in limited specific areas of the law, but, at the same time, you can sometimes be too creative in their interpretation. We recommend that you seek the advice of a tax professional in preparing your responses. At the Michael Ablan Law Firm we evaluate your position and then choose an appropriate strategy that will help increase your odds of emerging from the audit with as little financial harm as possible. Some of the general considerations are as follows:

1. should a request be made that the audit be handled through the mail

2. will an on-site examination increase your odds of getting a better result-very few on-site examinations are helpful to the client because the agent can physically expand his or her investigation and even talk to employees

3. whether an office interview would be a better approach especially if you have an attorney who can have the audit in his or her office

4. whether the case should be transferred to another office

5. how to limit the scope of examination

We often refer to the internal revenue manual which helps us determine the auditors’ process. Much of the detailed information on this website comes from that manual. Oftentimes we, at the Michael Ablan Law Firm in La Crosse, Wisconsin, La Crescent, Minnesota, or Hayward, Wisconsin can handle audits through the mail, office interviews and telephone communication, or by e-mail.

The work of field auditors is slightly different and involves site visits to business premises, for example, and examination of accounting records of yours in order to ascertain whether the tax returns were properly prepared. The field audit oftentimes rests on the failure to keep sufficient business records. The Field Audit and Investigation Unit is responsible for conducting these on businesses and individuals with a view to combating tax evasion and avoidance. Field audits and tax investigations require not only the application of accounting skills and tax law knowledge as it applies to different business environments, but also involves the extensive use of interviewing, negotiating and investigative techniques. A tax practitioner should have the experience and knowledge to handle all aspects of a field audit. At the Michael Ablan Law Firm, LLC. we have that experience and knowledge. Our in-house accountant Dean Gustafson has over 45 years of experience as a private-sector auditor. Between Dean and Attorney Michael Ablan, there is a combined 80 years of experience.

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COMPROMISES

This is a situation where the Michael Ablan Law Firm studies the details of your financial situation and your ability to pay, and determines if compromise should be submitted and in what amount. These are referred to as offers in compromise and this is a procedure whereby the IRS will entertain an offer to settle the tax liability for less than the amount due. These can be very valuable. Once a compromise is reached you cannot reopen the case. The IRS can if you prove there was fraud or concealment or a mutual mistake of fact. Compromises are more easily obtained if the taxing authority has already made attempts to collect which have failed. However, compromises that are made before collection procedures fail oftentimes produce good results. Furthermore, during the compromise negotiations the IRS will usually withhold further collection efforts, unless you can establish that a delay may jeopardize their ability to collect in the future. I have never had a case where collections continue. There are several areas of negotiation. First of all there may be doubt as to liability or who is liable; there may be doubt as to collectability or whether or not you can’t afford to pay the liability. We, at the Michael Ablan Law Firm in La Crosse, Wisconsin, La Crescent, Minnesota or Hayward, Wisconsin will examine your future income, your age, your physical condition as it relates to income production. Similar rules or laws apply to businesses. There are certain extensive financial forms which we prepare that are required to support the offer. We will take the information from the form and before we send it in calculate what we think will be within the range of acceptability. An unreasonably small offer may be rejected out of hand.

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COLLECTION APPEALS

If you have not had a chance to protest the initial audit with the appeals division before you received your notice of deficiency, this is your opportunity to do that. As mentioned above, CAP is also available, however, CAP is a final resolution and you cannot take your case to court for review of the decision after it is rendered, like you can with a CDP result. There is an advantage, however, because a CAP can be filed before you receive Notice of Federal Tax Lien or of Intent to Levy. The decision to file a CAP is quite technical and should only be addressed after consultation with a qualified tax attorney. Attorney Michael Ablan recommends the use of CAP when an installment agreement has either been rejected or terminated, or as otherwise indicated in reference to the collection due process (CDP) shortcomings.

The appeals settlement process is limited to a four month review period. When the Appeals officer receives the appeal he will contact our office in order to schedule a conference to try to settle the case. For an analysis of the choice of procedure for disputing the collection process, see also the section entitled “Collection Due Process.” If you have not had contact from a revenue agent, but have either received a phone call or some letter notice of the prospect of a lien or Levy, you will be asked to contact the IRS, usually by telephone. They will then inquire of the basis of your dispute with their collection process. This is treacherous territory and statements made can be irreversible. Attorney Michael Ablan at the Michael Ablan Law Firm can assist you in this process, and we oftentimes request that the IRS employee refer the case to a manager. If the discussion with the manager is unsuccessful, Attorney Michael Ablan can orally request an appeal if there is an imminent deadline. If you have already been contacted by a revenue officer and you may have already discussed your situation with that officer, you still have the right to appeal. The collection appeal request must otherwise be in writing. There are very short windows of opportunity to appeal, in some instances two days and in others 10 days. Collection will be stalled if your appeal is properly submitted.

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INSTALLMENT AGREEMENTS

When taxpayers are unable to pay a liability in full, an installment agreement (IA) should be considered. Installment Agreements are arrangements by which the Internal Revenue Service allows taxpayers to pay liabilities over time. If full payment cannot be achieved by the Collection Statute Expiration Date, and taxpayers have some ability to pay, Partial Payment Installment Agreements may be granted. During the course of agreements, penalties and interest continue to accrue. Generally, no levies may be served during installment agreements but penalties and interest continue to accrue on unpaid liabilities.

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PENALTY ABATEMENT

The Michael Ablan Law Firm will prepare a letter brief on your behalf if it appears that you have reasonable cause to challenge the penalties that have been assessed in your tax collection case. Reasonable cause is based on all the facts and circumstances in each situation and requires the IRS to provide relief from a penalty that would otherwise be assessed. Reasonable cause relief is generally granted when you exercised ordinary business care and prudence in determining their tax obligations but were unable to comply with those obligations.

Reasonable cause relief is not available for all penalties; however, other exceptions may apply.

If you have reasonable cause for failing to pay taxes or to file returns, penalties can be abated if the request is properly worded. Reasonable cause is based on all the facts and circumstances in each situation and allows the IRS to provide relief from a penalty that would otherwise be assessed. Reasonable cause relief is generally granted when you exercise ordinary business care and prudence in determining your tax obligations, but are unable to comply with those obligations. In the interest of equitable treatment of you and effective tax administration, such relief provisions must be made in a consistent manner and should conform to the considerations specified in the Internal Revenue Code (IRC), Regulations (Treas. Regs.), and IRS Policy Statements.

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If you or you business have been contacted by the IRS and if you are looking for a tax lawyer to compromise, negotiate, or effectively deal with the IRS, or if you or your business is in need of tax litigation, or tax defense, we, the Michael Ablan Law Firm can help you. With an experienced and aggressive yet honest, trustworthy and friendly legal team consisting of a lawyer with 35 years of experience, specialized paralegals, and a tax accountant, the Michael Ablan Law Firm in La Crosse, WI can help you. We also have offices in La Crescent, Minnesota and Hayward, Wisconsin. Contact us for a free consultation. Our expert legal services are available to you anywhere in the State of Wisconsin including but not limited to the counties of La Crosse, Trempealeau, Monroe, Crawford, Vernon, Grant, Jackson or any other county in Wisconsin or in the state of Minnesota, including all counties surrounding La Crescent, MN, such as Houston and Winona and any other county.

IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the IRS, we inform you that, unless expressly stated otherwise, if any U.S. federal tax advice contained in this communication, (including any attachments) is not intended or written to be relied upon or used, and cannot be relied upon or used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction of matter addressed herein.