Tax issues are never easy to understand.  That is why when you receive information from the IRS about money owed and threats of taking assets and property, it is easy to feel overwhelmed and hopeless about the situation. Many people have employment problems, health issue, and other financial struggles that make it difficult to fully meet tax obligations.  But in those cases, it is important to remember that unique agreements can be crafted to resolve the situation.

For example, a tax attorney can explain how an “offer in compromise” might be used to allow you to pay a tax debt that is actually less than what you owe to the IRS.

An offer in compromise only works when you meet certain qualifications.  In general, those qualifications hinge on different factors, like you income, overall ability to pay, monthly expenses, and the assets that you own.

The IRS website on the offer in compromise program explains that they “generally approve an offer in compromise when the amount offered represents the most [they] can collect within a reasonable period of time.”

There are many complexities to the offer in compromise program.  Different forms have to be filed, and your qualification must be shown explicitly.  In addition, certain actions may preclude you from participating.  For example, if you have an open bankruptcy proceeding, then you likely cannot participate in the program.

To explore use of an IRS Offer in Compromise in Massachusetts, please contact the tax lawyers at McGinn Law today.

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A revocable living trust is a crucial estate planning tool for all Massachusetts residents.  Importantly, a trust, like a last will and testament, is a legal tool to pass on assets to another.  However, unlike a will–which designates others to receive property after death, a living trust is created while you are still alive.  It is a separate legal entity that “holds” your assets, with automatic action to commence upon your passing.

It holds many advantages when compared to a will.

For one thing, a revocable living trust allows you to retain control your assets now, will having more control over assets in the event of your heirs divorce, remarry, or there are other unique family issues.  Instead of a valuable piece of property going to in-laws or non-family members in subsequent generations, some trusts allow you to dictate how you’d like property to be maintained long after your passing.

A revocable living trust is also very useful if you have minor children.  It allows you to provide financial protection for those children, by appointing a trusted person or persons to be the trustee of the trust, with a fiduciary duty to follow your wishes as stated in the trust.  The trustee or trustees can be the same or different from the guardian’s you appoint for your children.

Also, a trust, unlike a will, avoids the costly and lengthy probate process.  Probate is the court proceedings were a will is revealed and decisions are made about honoring its terms, etc.  It is also a public process, with anyone able to learn about the details of the will and the estate.  A trust, however, avoids all of that, by having control of the assets given to automatically to a new trustee.

These benefits of a revocable living trust exists no matter how many assets you have or what your specific family situation.  For help setting up one of these trusts in Cambridge, Danvers, or elsewhere in Massachusetts, be sure to contact the estate planning lawyers at McGinn Law, PC.

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It goes without saying that it is important for everyone–no matter how much money you have or how old you are–to create a will.  In addition, for many there is significant benefit from having a little more advanced estate planning completed, like the creation of a living trust or use of other legal tools.

Yet, regardless of the advice that everyone receives about getting serious with these inheritance and financial preparation matters, many community members in Massachusetts (and throughout the country) fail to even have a last will & testament drafted.

The consequences are often surprising.

Each state has what are known as “intestacy” rules which dictate how assets are divided in the event of someone dying without a will  These are “default” rules which determine who gets what.  There are differences in each state, but, in general, there is a hierarchy of preferential heirs beginning with a spouse and children, then parents, siblings, and, if necessary more distant relatives.

But what happens if no relatives at all can be found?  That is exactly what happened in a recent case, discussed by Forbes.  A reclusive NY real estate developed died in early 2012.  His fortune is estimated at over $40 million.  However, he did not have a will and officials cannot find a single relative.

What do the default rules says happens then?  All of the money will be given to the state government.

For aid creating a will in Cambridge, Danvers, or throughout the area, please contact our estate planning attorneys at McGinn Law for tailored help.

The post Dying Without a Will – NY State Government to Get $40 Million appeared first on McGinn Law, PC.

The IRS has extensive power to collect the money that it feels it is owed.  Sometimes this means they will issue a “Notice of Levy” against someone they feel is late in making tax payments. Local residents in Cambridge, Danvers, and elsewhere who receive an IRS levy likely had the agency send various other letters previously, explaining money owed, interest, penalties, and more.

The IRS levy is the seizure of your property in an attempt to satisfy the tax debt. This may include a wide range of assets, from bank accounts and retirement savings, to wages and more.  The levy is sent directly to the “payer,” such as your employer.  In this way, the IRS can take funds that would otherwise go to you.  Obviously,  it is in everyone’s best interest to work out alternative arrangements so that this process does not play itself out.

Be clear to distinguish a levy from a “lien.”  A lien is a legal claim placed on one’s property.  It applies with assets that cannot simply be handed out by writing a check.  For example, a lien may be placed on a home that you own, which will require the IRS to receive payment before it can be sold.

It is easy to feel overwhelmed when dealing with a large federal agency like the IRS.  Fortunately, you do not have to do it alone.  By contacting an experienced Massachusetts tax attorney, you can ensure that your rights are protected and everything possible is done to resolve the matter in your favor.  Do not delay.  Reach out to a tax professional today.

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Tax season has come and gone, but that does not mean that everyone can ignore tax issues for the next ten months.  That is because some residents may be receiving letters from the IRS informing them of various issues, irregularities, or problems with their tax return.  One of the most common contact that one might have with the IRS is a “Notice of Deficiency.” 

As the name implies, an IRS Notice of Deficiency is a formal letter sent to indicate that the IRS believes more taxes are owed than were paid–a deficiency.  The notice should indicate the tax owed, penalties, and fees assessed. The letter, as required by law, will also explain that the taxpayer has the right to appeal the decision if they disagree with the IRS determination.  The United States Tax Court is where any disagreement is handled.  Obviously if you seek to protect your rights in this way, it is critical to have the aid of a tax attorney to guide you through the process.

If you get this letter, what should do?

The notice will likely explain that the taxpayer has 90 days to pay the assessed amount or file a Tax Court petition to contest the assessment.

It is important not to ignore this letter and hope that it will go away.  If the deadline time comes and goes without action, the IRS can take various actions and your ability to object to the assessment of the tax becomes much harder.  For example, they may issue a “Notice to Levy” which allows them to enforce collection, which may includes seizing property.  While we often file a petition with the Tax Court, the case can be resolved out of court in the IRS Appeals Process which lowers the costs to everyone.

These tax issues are very complex.  If you are in Massachusetts be sure to contact the tax attorneys at our firm for help.

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Few issues related to estate planning have garnered more attention in recent years than the estate tax.  Dubbed the “death tax” by  its opponents, this is a tax that often eats up a significant portions of large inheritances.  Policymakers have long disagreed on the level that the tax should kick in and the rate that it should be imposed.

Most recently, there seemed to be a somewhat permanent compromise.  As part of the legislation that avoided the so-called “fiscal cliff” in early January, a law was passed which most believed provided some stability to the tax.  The measure set the tax rate at 40% and had it apply to assets above $5.25 million.

However, those estate tax details may yet again be at the center of political debate.  That is because this month President Obama released his proposed budget.  As part of that proposal he called for changes in the estate tax.  Per the new proposal, the President is hoping to increase the rate from 40% up to 45%.  In addition, he would like the exemption level to drop to $3.5 million.  Of course, the purpose of the changes are to help balance the strained budget.  But these changes would expose many more family to this tax liability.

It is impossible to say with any certainty whether this proposal will advance.  But at the very least it is a reminder that local families should be vigilant about their estate planning such that all legal changes are accounted for and they are best positioned to protect their assets.

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If you receive an Notice of a levy notification from the IRS in the mail, don’t ignore this correspondence.  Ignoring the issue is probably what required the IRS to start the levy process in the first place.  Money owed to the IRS is a serious matter, and if you ignore phone calls and letters from the Internal Revenue Service, they will levy your bank account or stock account and use your assets to repay your debt on their terms.  That can cause problems for you to pay your bills and get on with life.

Contrary to what you may have heard, the IRS does not take pleasure in levying bank accounts.  For this reason, the department usually works with taxpayers to work out a deal. I n most cases, setting up a payment arrangement in advance can prevent any type of levy.

Contact the IRS and explain any financial hardship. Together, you and the IRS can create and affordable payment plan. And since the IRS gives taxpayers several years to repay their debt, what you pay each month may be less than you fear.  Other options such as offers in compromise (or offers in settlement in Massachusetts) may be available to you.

As long as you work with the IRS and make your payments as scheduled, you can protect your bank account and other assets from an IRS levy.

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With mid-April marking the official sunset for regular tax season, many may be breathing a sigh of relief that the always dreaded chore is over for your family and/or business.  However, a potential audit always hangs over your head.  No one wants to deal with the immense hassle of finding countless receipts, documents, and other paperwork while fearing errors may lead to costly additional payments

A recent article offered a few ideas about issues that often “invite” an audit or delay in acceptance of a return.  It may be worthwhile to scan the entire article to get an idea of some of these basic concerns.  For example, math errors always raise red flags.  This is most commonly an issue with paper returns, as hitting the wrong button on the calculator can result in obvious mistakes which could cause IRS folks to look closer.  Electronic filing is helpful in this regard, because it usually means the program is checking the math for you.

Also, many of these common errors indicated in the article relate to failure to ensure basic information is correct.  Mistakes with social security numbers, bank account numbers (for direct deposits or withdrawals), and checking the wrong box for credits and deductions can spur problems.

At the end of the day, there is no way to know for sure whether you will or will not receive the feared audit notice from state or federal officials.  If you do, it is important to act prudently to secure the assistance of a tax attorney.  The legal professionals at our firm offer DOR representation to all Massachusetts residents, ensuring that your best interests are protected and you get through the process as painlessly (and cost-effectively) as possible.

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So what happens when you receive a formal letter from the IRS called an IRS Notice of Deficiency?  What have you done?  And how can you rectify the situation?  Getting a formal letter from the IRS can be startling; however, an IRS notice of deficiency is just their friendly way of informing you that there is a discrepancy on your tax return.  Don’t panic.  Also it doesn’t mean the IRS is right.   They may not have all the relevant information to determine your liability.  Quite simply, you haven’t paid enough according to the IRS’s calculations. The IRS notice of deficiency will advise you of your appeal rights with the US Tax Court.  The notice will alert you to how much more you owe with any penalties and interest if applicable.

When A Notice of Deficiency Arrives its Important you Don’t Delay.  The clock is ticking.

It is important to take action immediately.  You have a limited time to oppose the notice of deficiency otherwise it becomes impossible to contest the notice in the tax court and becomes harder to contest the assessment.  Once you receive the IRS notice of deficiency you will have 90 days with which to pay the amount owed or file an objection.  If you disagree with the IRS notice of deficiency you will have to file a petition with the US Tax Court.  It is up to you to provide the facts and reasons why you believe the amount you sent in is correct. Again, you have 90 days with which to file this petition if you want to have your case heard.  You may want to enlist the help of a tax attorney if you are prepared to go to Tax Court and have them help argue your case.  Often these issues can be resolved long before an actual tax court hearing.

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Many families have been torn apart by inheritance disputes.  Few issues can divide even the strongest families quicker than disagreements about finances or fairness in the passing on of assets. For example, the Washington Post published a story last week that highlights one very common way that elderly parents decision about inheritances can cause restlessness and anger among family members.

The story includes a letter from a man who is upset about changes to his parents will.  Initially, the man helped his parents draft their last will, and he was named as executor.  That document left some funds to charities and split the remaining between the family’s two adult children.  However, a few years later the son was surprised when his parents gave him a second will as a replacement to the first.  In the new will, the inheritance was split three ways, instead of two.  The son and his sister would each get one third and the remaining third would be split between the parent’s grandchildren (the sister’s children).

The adult son admitted his frustration at having his inheritance go from one half to one third.  He explained that he felt penalized for not having children, and openly admitted that he was resentful.

Identifying Controversial Estate Planning Issues

This sort of misunderstanding and frustration is common in estate planning.  There is never a right or wrong to how one should allocate an inheritance.  However, there are ways that decisions can be made and information shared with family members which can ease tensions and alleviate the risk that these money matters will lead to long-term family feuding.  Having the aid of experienced estate planning attorneys is often very helpful in identifying these risks and preventing them.

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