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2019 Year in Review: What Maryland Residents Need to Know About Federal Tax Law Compliance

Offshore Account Update

Posted in on December 31, 2019

If you live in Maryland or own a company that does business in Maryland, you owe obligations to the Internal Revenue Service (IRS). Even if you don’t owe any tax, you still have reporting obligations, and failing to submit the necessary annual filings is one of the surest ways to draw the IRS’s ire. However, there are various other issues that can expose Maryland taxpayers to IRS scrutiny as well – and we covered many of these issues on our blog during 2019.

From taking advantage to “tax shelters” to negotiating offers in compromise, and from filing late returns to failing to report offshore holdings, there are many different ways that Maryland taxpayers can find themselves dealing with the IRS. Below, Maryland tax attorney Kevin E. Thorn takes a look back at the topics we covered in 2019:

1. Tax Shelters: Abusers, Promoters and Securing a Sound Defense

Contrary to popular belief, there is nothing inherently unlawful about utilizing a “tax shelter.” There are many different types of lawful tax shelters, and even IRAs, 401(k) plans, real estate investments and municipal bonds have had this label applied to them in the past. However, while some tax shelters are lawful, others are not. The IRS is continuing to aggressively target individuals and organizations that promote and abuse unlawful tax shelters in Maryland, and those that are found guilty of violating the law can face both civil and criminal penalties.

2. Problems with Filing Tax Returns Late

You know that you need to file your tax returns with the IRS on time. You know that April 15 is a hard deadline for individual taxpayers; and, if you own a business, you know that you need to submit your quarterly estimated payments on time throughout the year. But, what happens if you don’t?

The IRS imposes penalties for late filing and for late payment. If you file late, pay late and incur the maximum penalties for both, you can be charged as much as five percent of your outstanding tax liability per month. However, if you can’t pay, you have options available, and you should discuss these options with a Maryland tax lawyer promptly.

3. How to Benefit from the IRS Offer in Compromise Program

For many taxpayers, one of these options will be to negotiate what is known as an “offer in compromise.” If you are able to successfully negotiate an offer in compromise, then you will be able to settle your federal tax debt for less than the full amount you owe. Negotiating an offer in compromise also allows you to have any federal tax liens released; and, if you are in financial straits, it may afford you the opportunity to avoid bankruptcy.

There are various eligibility criteria for negotiating an offer in compromise, and the IRS considers three primary factors in deciding whether to settle a taxpayer’s debt. As a result, if you think this may be your best option, it will be important for you to work with an experienced Maryland tax attorney.

4. IRS Tax Audits – What Should You Expect?

You received a letter from the IRS. You are being audited. What now?

Facing an IRS audit is a serious matter that requires your prompt and full attention. Even if you have accurately reported your income and paid what you owe, you will still need to convince the IRS of these facts in order to avoid penalties. While the IRS conducts three types of audits – correspondence audits, office audits and field audits – of varying degrees of intensiveness, they all ultimately present the same potential risks; and, although it is possible to dispute the results of an IRS audit, filing an appeal and litigating in the U.S. Tax Court both present a number of challenges.

5. A Maryland Tax Attorney Provides Strategies to Beat IRS Tax Audits

When facing an IRS audit, there are a number of strategies that you can potentially use to avoid liability for additional taxes, interest and penalties. The specific strategies available to you will depend on the particular circumstances involved in your audit, and you will need to assess the facts quickly in order to determine the best path forward. Should you cooperate? Should you provide information voluntarily? What should you do if you know you have underpaid the IRS? These are all questions that an experienced Maryland tax attorney can help you answer.

6. How Maryland International Tax Attorneys Can Help with an Offshore Bank Account Audit

If you live in Maryland and have funds stored in offshore bank accounts, it is important to make sure you have a clear understanding of how this impacts your obligations to the IRS. Under the Foreign Account Tax Compliance Act (FATCA), U.S. taxpayers are required to report their offshore holdings – and failing to do so can result in steep penalties. If the IRS audits your offshore bank accounts, you will need to engage the services of a Maryland tax lawyer who has particular experience handling international tax matters.

7. Maryland Offshore Account Law – 2019 Update

Staying on the topic of offshore accounts, now that the Offshore Voluntary Disclosure Program (OVDP) has expired, Maryland taxpayers who have failed to timely disclose their offshore accounts must utilize other IRS programs to mitigate their liability. For most, this means submitting a streamlined filing.

8. Top Things to Ask Maryland Offshore Bank Account Attorneys

Do you need to file an FBAR? If so, and if you have failed to do so in the past, how can you convince the IRS that your failure to timely disclose your offshore holdings was “non-willful”? Dealing with the federal tax implications of owning offshore bank accounts presents a whole host of issues, and the best way to avoid costly oversights and mistakes is to consult an experienced Maryland tax attorney.

Contact Maryland Tax Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group

Do you have questions about your 2019 tax returns? Are you concerned about facing an IRS audit in 2020? To discuss your situation with Maryland tax attorney Kevin E. Thorn, Managing Partner at Thorn Law Group, email, call 240-235-5096 or request a confidential consultation online today.

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