2019 Year in Review: What New Jersey Taxpayers Need to Know

With 2020 just around the corner, it is time to take a look back at the topics that had us talking during 2019. While federal tax law may not be a riveting topic by most people’s standards, there were actually some pretty newsworthy developments over the course of the year. In addition to discussing hot topics in federal tax law, we published several articles with practical tips for New Jersey taxpayers as well. Here is a look back at our top nine articles from 2019:

1. Banking Offshore May Benefit Investors, But There are Also Strict IRS Obligations

“The promise of anonymity and potential high interest rates are just two of the reasons investors might decide to explore moving funds to offshore bank accounts. But opting to deposit funds in a foreign bank account without understanding all the potential ramifications could be a mistake.” In January, we provided an introduction to the potential benefits and pitfalls of offshore banking. We also discussed the FBAR filing requirement and the potential implications of failing to report offshore bank accounts to the IRS.

2. Paying Off IRS Debt With Installment Agreements

“You can’t pay your taxes. You are racking up penalties and interest and it’s gotten to the point where you know you are going to need the help of a New Jersey tax lawyer to negotiate some kind of payment plan with the IRS.” If you can’t pay the IRS what you owe, you potentially have a few different options available. One of these options is to negotiate an installment agreement. Guaranteed installment agreements and streamlined installment agreements are most common; and, while negotiating one of these agreements won’t reduce the total amount you owe, it can save you from incurring additional interest and penalties, and it can also prevent the IRS from pursuing liens, levies and other means of enforcement.

3. IRS Tax Liens: What You Need to Know

“When you have unpaid tax debt, an IRS tax lien is the U.S. government’s legal claim against your property. . . . The lien attaches to almost all [of your] property, including real estate, vehicles, stocks, retirement accounts, and other financial assets.” If you owe money to the federal government, the IRS will not wait for you to pay in perpetuity. It as a number of enforcement tools at its disposal, one of the most-effective of which is the federal tax lien. If the IRS places a lien on your assets, not only can this create problems when you attempt to dispose of your assets, but it can also prevent you from securing credit and have various other consequences as well.

4. Tax Fraud and Evasion in New Jersey

“The New Jersey Treasury Office of Criminal Investigation conducts investigations of suspected criminal violations of state tax laws. . . . The criminal penalties [] vary greatly for different types of New Jersey income tax fraud [and tax] evasion.” In addition to the risk of IRS enforcement action, New Jersey taxpayers can face severe consequences due to state-level criminal investigations as well. This is true for both tax fraud and tax evasion, which can be prosecuted as separate offenses under New Jersey law. For example, in New Jersey, the penalties for criminal tax evasion can include up to five years in prison and a $100,000 fine.

5. Is Your New Jersey Small Business at Risk for an Audit?

“Small business owners should be aware [that] there are certain business activities that often result in audits. An IRS audit can result in an increased tax assessment, interest, and potentially even tax penalties.” As a small business owner, you cannot expect to fly under the IRS’s radar. The IRS routinely audits small businesses, often focusing on issues such as travel and entertainment expense deductions, deductions for the business use of personal vehicles, home office deductions, and payroll tax reporting. Due to the potential for significant financial liability, New Jersey small business owners who are facing IRS audits should engage the services of an experienced federal tax lawyer promptly.

6. A New Jersey Tax Attorney Can Help You Deal with Delinquent FBARs

“Officially known as a Report of Foreign Bank and Financial Accounts, an FBAR must be filed with the Financial Crimes Enforcement Network (FinCEN). The FBAR must be filed by a taxpayer holding any offshore accounts with an aggregate value over $10,000 at any time during the tax year.” Under federal law, U.S. taxpayers who own offshore bank accounts are required to disclose their overseas holdings to the government. Failure to do so can result in civil or criminal penalties; and, if you have failed to timely disclose your offshore holdings, you must deal with the issue promptly. Now that the Offshore Voluntary Disclosure Program (OVDP) has expired, taxpayers must utilize other means to deal with delinquent FBARs.

7. IRS Foreign Asset Seizures to Satisfy Tax Debt

“If the IRS believes a taxpayer is knowingly or willfully failing to disclose offshore accounts, it has options to collect the fines and tax penalties owed. One of these options is the seizure of foreign bank accounts, property or income.” For taxpayers who owe outstanding obligations to the IRS in relation to their offshore accounts, one of the primary options available for avoiding a foreign asset seizure is to submit a filing under the IRS’s streamlined filing program. If you are eligible to file, submitting a streamlined filing can protect you from other potential consequences as well.

8. New Jersey Offshore Account Law – 2019 Update

“The expiration of an important federal program at the end of 2018 means that U.S. taxpayers with offshore bank accounts have fewer options for avoiding steep penalties in 2019. While the steps for timely reporting foreign financial accounts remain largely unchanged, taxpayers who are delinquent on their foreign financial disclosures now have less choices available.” The transition from the OVDP to the IRS’s new streamlined filing program was the biggest change in offshore account law in 2019. While the OVDP technically ended on September 28, 2018, the shift continued to present challenges for U.S. taxpayers throughout the ensuing year. As we move into 2020, taxpayers who own offshore accounts will need to continue to utilize the streamlined filing program in order to avoid civil and criminal prosecution due to delinquent filings.

Contact Thorn Law Group in New Jersey for Assistance

If you have questions about FBARs, tax audits, tax liens or any other federal tax matter, we encourage you to get in touch with us today. To speak with New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, email us, give us a call at 201-355-8202 or inquire online today.