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Singer Beyoncé Squares Off with Uncle Sam over Alleged Tax Liability

A tax attorney in San Jose has learned that Beyoncé has squared off with the Internal Revenue Service regarding a tax liability of $2.7 million. The singer brought the challenge to the IRS in United States Tax Court.

According to Forbes, 41-year-old Beyoncé filed a Petition for Redetermination concerning tax bills for 2018 and 2019, which together totaled almost $2.7 million. The singer received a Notice of Deficiency for those years, which included penalties and interest.

IRS Claims Beyoncé Owes Millions in Tax Penalties

The agency assessed that Beyoncé owed $805,850 more than she paid for the taxable year 2018, and more than $161,000 in interest and tax penalties due to this alleged delinquency. For the taxable year 2019, it was also determined by the IRS that $1,442,747 in additional taxes were owed, and interest and penalties for that year were assessed at more than $288,500.

The total amount the “Lemonade” hit maker is disputing comes to almost $2.7 million. Beyoncé alleged in her petition that the IRS erroneously disallowed millions of dollars of legitimate deductions, such as those for expenses, professional and legal services, management fees, insurance, utilities, depreciation, and other expenses.

For example, the IRS alleges that a charitable contribution carryover, totaling more than $868,000, should not be allowed. This amount was reported in 2018, but the pop star disputes the agency’s claim.

Beyoncé also stated that the IRS was wrong when they determined that she failed to report $1,449 in 2018 as income from royalties. The singer has the option of seeking tax audit representation, but how the petition plays out remains to be seen.

Accuracy-Related Tax Penalties Also Assessed by IRS

The petition contested IRS-assessed penalties as well, which the Bureau categorized as accuracy-related fees. The agency calculates penalties of this kind at 20 percent of the total amount of the underpaid taxes according to Internal Revenue Service Code Section 6622.

The IRS website states that “disregard of rules and regulations,” “negligence,” and “significant understatement of income tax” are the most commonly awarded tax penalties in this category.

Beyoncé Asserts No Wrongdoing

Beyoncé asserted that her 2018 royalties and deductions were all properly reported and there should be no additional tax liability on her part. She went on to say that she “acted reasonably and in good faith,” and therefore should not be given accuracy-related penalties even if the IRS determines that additional taxes are indeed owed. A tax audit attorney is often consulted in such cases.

It Was a Very Good Year

Beyoncé enjoyed a profitable year in 2018, during which time she released an album with her husband, Jay-Z, entitled, “Everything Is Love,” and afterwards, the couple began their high profile “On the Run II” stadium tour. Beyoncé was also a headliner at the 2018 Coachella Valley Music Festival.

In addition to her 2018 accomplishments, Beyoncé made a profitable agreement with Netflix in 2019 regarding her concert film “Homecoming” and released a live album by the same name.

More than one tax attorney in San Jose will likely be following the developing story and providing updates. Regardless of celebrity status, those who find themselves at odds with the IRS should seek legal help from a back-tax attorney or other qualified legal professional.

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Former Housewives Star Kim Zolciak Divorcing Husband Amidst Tax Liens Totaling over $1.1 Million

For some time now, Kim Zolciak-Biermann, former Real Housewives of Atlanta star, has been denying rumors of money problems. Recently, however, the Internal Revenue Service escalated the money issue. Zolciak and her husband, Kroy Biermann, former NFL outside linebacker, reportedly owe more than $1 million to Uncle Sam. Anyone in this position probably needs back-taxes help from a legal professional, especially if liens have been filed by the IRS, as is the case with the aforementioned couple. To further complicate matters, an IRS tax attorney in San Jose has learned that the couple has filed for divorce, breaking the hearts of millions of devoted fans.

Divorce Proceedings Filed in April; Zolciak Seeking Child Custody

April 30 is listed as the official separation date for the couple, who were married for over a decade and had four children together during that time. Zolciak cited irreconcilable differences, and that the marriage had, according to her, no hope of reconciliation. The former Housewives star is seeking joint legal custody and primary physical custody of their four children, as well as spousal support. She also stated she intends to have her maiden name legally restored.

Loan Default in Couple’s History

Last fall, Zolciak and Biermann reportedly defaulted on the mortgage for their Fulton County, Georgia home. The $1.65 million loan was through Truist Bank. People Magazine reported that the bank planned to auction the home off this past March, and rumors circulated that it had sold for $257,000. Zolciak and Biermann adamantly denied this rumor, stating that “millions and millions of dollars” were put into the home, that it was worth almost $2.5 million, and that therefore it would never be sold for that amount of money. According to Redfin, when purchased in October 2012, its price was $880,000.

Tax Liens Total Over $1 Million

Federal tax liens have plagued the couple for many years, going back as far as 2013 and including 2018, 2019, 2020, and the current year. As of March 30, the exact total of the cumulative liens was $1,147,834.67. The state of Georgia also filed a tax lien of $15,000 for taxes allegedly due in 2018. Most individuals who face property liens consult a back-taxes attorney to get back on track and make peace with the IRS.

Tax liens were designed to protect the government’s interest in real estate. The IRS must assess the tax liability and make sure a bill is sent to delinquent taxpayers, giving them a chance to pay the bill before a lien can be filed. The lien, referred to as a Notice of Federal Tax Lien, alerts creditors that Uncle Sam has a legal right to the real estate or personal property. Tax help is available in certain cases, and sometimes a payment arrangement can be worked out. If the tax liability is paid off, the lien is typically released. Unfortunately, tax liens and divorce often go together.

Liens may accrue interest and penalties even if the person is on a payment plan, so tax lawyers should be consulted by those who find themselves in this position. It’s unclear what the next steps might be for the former Housewives star and her soon-to-be ex-husband, as they did not respond to various requests for comment. Back-taxes help is available from qualified attorneys, so it is always wise to seek such help when facing tax liens or delinquent taxes.

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Mixed Reaction to IRS Direct E-File System

A tax attorney in San Jose has learned that the Internal Revenue Service announced the debut of a government-managed tax-filing system on Tuesday. This free service allows taxpayers to avoid using third-party services. Instead, they can deal directly with the IRS at no additional cost. The details of this new system were covered in a final report that was ordered by the Inflation Reduction Act. The report was released on Tuesday, and the program is still being tested.

IRS Will Not Run New System Alone

According to IRS Commissioner Danny Werfel, the launch of the new program is in compliance with proper practices for new product launches in both the private sector and the government. The US Treasury has directed the implementation of this new system from the point of research through its full development, which was done in an incremental manner to ensure proper testing along the way. He added that the IRS will not single-handedly run the new system.

Taxpayers Assured They Still Have Options

Werfel told reporters on Tuesday that US taxpayers’ choices for filing will in no way be limited by the presence of the new system. If they choose not to use it, they can continue with whatever method currently works for them or consult an IRS tax attorney to resolve any filing problems they may be facing. The pilot program is expected to be rolled out during the 2024 filing season, according to Department of the Treasury official Laurel Blatchford.

Tax Filing Costly and Time-Consuming

Blatchford stated that it is time-consuming and expensive for Americans to file taxes, and she estimated that most individuals spend about $140 and eight hours of time having their tax returns prepared each year. Those who find themselves in need of a back-taxes attorney, or who face challenging issues with their tax returns, may spend considerably more. She went on to state that many countries throughout the world offer tax filing options at no cost to their citizens, and that an accessible option for American taxpayers should be available as well. The IRS’s report stated that the new system received support from the majority of the country’s taxpayers.

However, in a conflicting report conducted by the nonpartisan MITRE Corporation, the findings indicated that direct file was unpopular overall among United States citizens when compared to a program where the IRS files automatic returns for taxpayers. It also paled in comparison to the use of private software.

The MITRE study found that a mere 15 percent of filers would use an IRS direct e-file system even if it offered a functionality similar to that of free commercial software.

Big Tax Software Companies Targeted

On Tuesday, Senate Finance Committee Chairman Ron Wyden, D-OR, referred to big tax software companies as “sophisticated pickpockets,” charging them with relentless lobbying against reforms that would make it easier to file taxes and tricking customers into the acceptance of unjustified charges.

He went on to state that he believed all US citizens should have easy, free tax filing options, and that these should be available online. Wyden expressed happiness with this new effort and stated he’s looking forward to it becoming a reality.

Conflict over the Involvement of Partisan Organization 

In February, the IRS announced that it would allow the New America Foundation, a progressive billionaire-funded nonprofit think tank, to evaluate the hypothetical system. House Ways and Means Committee Republicans spoke out against the IRS for its hiring of a partisan group, stating that the Inflation Reduction Act itself calls for independent, third-party, nonpartisan review of the feasibility of the system, its costs, and the opinions of taxpayers on the matter.

Jason Smith, the Republican chairman for the House Ways and Means Committee, accused Biden of failing to be transparent concerning MITRE’s independent findings and criticized him for hand picking a left-wing think tank that, in his opinion, would stack the deck toward a predetermined conclusion. It remains to be seen whether the US ultimately embraces or rejects the new option.

It’s not yet known if the system will handle specific problems, such as assisting filers who owe back taxes or who need unfiled tax return help, or if the program will be more suited to those with simple returns. Tax lawyers in San Jose are still the best individuals to help filers with complicated problems, and they will continue to monitor this story as it develops.

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TurboTax Settles Lawsuit for $141 Million

The New York Attorney General has stated that TurboTax will be sending approximately $141 million to American taxpayers as part of a court settlement. The agreement was reached last year by Intuit, the parent company of TurboTax, after they were accused of misleading their tax clients by charging money for services that could have been obtained at no cost. A back taxes attorney or any attorney familiar with such services would probably agree that customers should be steered away from paying for any type of help that is otherwise available for free.

Allegations of Deceptive Trade Practices

Although Intuit did not agree to any wrongdoing, it is alleged that they used unfair and deceptive trade practices to take money from clients when free options were available. The settlement terms included Intuit’s agreement to suspend the “Free, Free, Free” ad campaign being run by TurboTax and make restitution to approximately 4.4 million taxpayers who utilized the Free Edition of TurboTax from 2016 to 2018.

Direct payments will go to customers who are impacted by the alleged deception. Such individuals can expect to receive an automatic payment of approximately $30 for each year that they paid for TurboTax services that were then touted as free.

New York Attorney General Makes Statement

An IRS tax attorney in San Jose has learned of an announcement made by Leticia James, New York Attorney General. James announced that throughout May, checks will be sent to former TurboTax customers, and stated that millions of low income Americans fell prey to the deceptive and predatory marketing practices of TurboTax and were subsequently cheated when all they were trying to do was abide by the law and file their taxes.

Deception Alleged by a 2019 ProPublica Report

Intuit does offer a free edition of TurboTax for filers who are submitting what is referred to by the company as a “simple return.” However, only approximately one third of US taxpayers qualify for this “freemium” product, which according to James, was marketed aggressively. Meanwhile, “Free File,” the Internal Revenue Service’s own free product is available to approximately 70 percent of filers.

The investigation was sparked by a 2019 A ProPublica report, which claimed that executives at Intuit were well aware that customers were being deceived.

Intuit Denies Wrongdoing

According to San Jose tax lawyers, all 50 states and the District of Columbia signed the settlement agreement once it was reached. General Counsel Kerry McLean and Intuit Executive Vice President stated in a blog post that they were pleased to have reached resolution.

McLean pointed out, however, that neither TurboTax nor Intuit admitted to any wrongdoing, and stated that the companies were dedicated to continuing to serve the needs of American taxpayers in the future. McLean also claimed that Intuit and TurboTax were always fair and clear with their clients concerning various services, and that over the last eight years, almost 100 million taxpayers filed their returns free of charge using Intuit’s products.

It’s always wise for American taxpayers to consult a tax professional or back taxes attorney to discover the best option for filing tax returns and paying any outstanding tax bills.

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Time Running Out to Repay Funds Withdrawn from Retirement Accounts in 2020

Near the beginning of the 2020 Covid-19 pandemic, certain investors were allowed to withdraw up to $100,000 from 401(k) plans and individual retirement accounts without the usual penalties and restrictions. The federal relief law passed in the spring of 2020 provided savers with special tax benefits regarding those withdrawals. However, any San Jose tax lawyer could confirm that as of June, 2023, many individuals now have weeks, or even mere days, to repay those funds or forfeit the benefits. 

Three-Year Repayment Window Soon to Close

Part of the federal relief package, also called the CARES Act, provided funds to cash-strapped households due to extraordinarily high unemployment rates resulting from the pandemic. Part of the Act included a break for those saving money in various types of retirement accounts. An Internal Revenue Service tax attorney explained that one benefit to owners of such accounts was a waiver of the typical tax penalty of 10 percent if money is withdrawn early from the account. Additionally, tax breaks for owners of such accounts were also written into the Act. 

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The CARES Act stated that investors would be given a three-year window during which they could claim a refund for taxes paid on the early withdrawal if all or part of the distribution was repaid within three years. This essentially made the withdrawals more like tax-free loans. These benefits were only available in 2020, and now that the three-year repayment window is closing, it remains to be seen how many individuals may end up needing a back-taxes attorney. 

The downside of this type of benefit is that the repayment can easily slip a person’s mind. The clock began ticking the day after the funds were acquired, so most of the deadlines are looming in months, weeks, and days. A wage garnishment lawyer or an attorney who deals with complicated tax returns is probably the best individual from whom to seek advice if one has forgotten about this stipulation.

Most Distributions Taken Between June and December 2020

Florida CFP Sean Deviney stated that most individuals who withdrew money from their retirement accounts did so from June to December. Even though the CARES Act was passed in March, in most instances, it would have taken a month or two for retirement plan administrators and employers to create a system to facilitate the withdrawals.

Records suggest that hundreds of thousands of families and individuals impacted by the pandemic took such distributions if they were available, but not many have repaid the funds yet.

An Interesting Statistic 

The Vanguard Group stated that about 268,000 of the 4.7 million retirement investors for whom they manage accounts withdrew some money from their retirement programs in 2020. However, less than 1 percent had repaid it by the end of 2021. This is Vanguard’s most recent data.

Refunds Must Be Claimed Through an Amended Return

According to the IRS, investors who repay part or all of the funds by the appropriate deadline are required to file an amended tax return to claim a refund. Savers had the option to take the income-tax liability over the course of three years, but the individual would be required to file an amended return for each of those years. If, on the other hand, the same person chose to report the entire amount withdrawn on his or her 2020 tax return, it would only be necessary to submit one amended tax return.

Interestingly, investors were not required to repay the funds to the original account from which they were distributed. This is because the person may have changed jobs, or may have stopped participating in the retirement plan, particularly if it was work-sponsored. A San Jose tax lawyer should be contacted by anyone with concerns about these, or any tax related issues. Contact Us for a Tax Attorney in San Jose.

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DOJ Alleges NFL Linebacker Bill Romanowski Owes $15 Million

Bill Romanowski, once a linebacker for the Denver Broncos, has rarely been far from controversy. Hiring a back-tax attorney may be next on his to-do list if he is indeed guilty of tax evasion, as the Department of Justice claims. The famous football player enjoyed a prolific career that spanned 16 years, during which he played for the 49ers and the Broncos and won four Super Bowl titles. However, Romanowski has consistently found himself in controversial situations, the most recent of which is this mounting tax problem. 

Court’s Demand for Payment Allegedly Ignored by Back Taxes Attorney

A tax attorney in San Francisco has learned that the football player’s tax problems allegedly began as far back as 1998, when he was still earning his paychecks in Denver. According to The Athletic, the amount of back taxes owed by Romanowski and his spouse, Julie, exceeds $15 million. The suit alleges that the couple owed unpaid taxes for decades and was ordered to repay an unspecified sum in 2013 on two separate occasions.

According to the Department of Justice, the amount now owed is $15.33 million, which includes statutory penalties and interest that have accrued since 2013, when Romanowski and his wife were initially ordered to pay. The complaint alleges that although they were notified in a timely manner about the demand for payment, they neglected or refused to settle the bill.

Additional Accusations by the DOJ

They also allegedly used business funds from N53, their nutritional product line, for personal expenses such as spa and salon appointments, groceries, rent, and cosmetic surgeries. The N53 line consists of meal replacement shakes and other supplements designed to aid in muscle building and enhance fat loss. 

The couple is also accused of using the nutritional company to illegally shield them from taxes and interfere with the Internal Revenue Service’s attempt at collection. A San Francisco tax lawyer has confirmed that using a business to hide monies is also illegal and can be handled as a separate charge.

No Stranger to Public Scrutiny

Romanowski has attracted public scrutiny quite a few times over the years and has found himself involved in several controversies. Arguably, the most serious of these dates back to 2003, when teammate Marcus Williams was essentially forced to retire from the NFL after Romanowski punched him, shattering his eye socket. The incident occurred during a scrimmage, and the 57-year-old linebacker was sued by Williams for $3.4 million in damages. Williams was ultimately awarded $340,000 for medical expenses and lost wages.

The football player was also implicated in what was referred to as the “BALCO steroid scandal,” when government records were brought forth to reveal that Romanowski had used two separate performance-enhancing steroids. In 2005, on an episode of “60 Minutes,” the linebacker admitted to his use of steroids.

An Impressive Career

Romanowski’s career was nevertheless impressive, spanning from 1988 to 2003. He spent six seasons each with the Broncos and the 49ers and won Super Bowls in 1997 and 1998 with Denver, and in 1988 and 1999 with San Francisco. Additionally, he spent two seasons with both the Eagles and the Raiders. During his 16 years in the NFL, he made two Pro Bowls and was featured in a total of 243 pro games, registering 1,118 tackles, 39.5 sacks, and 16 forced fumbles. 

Some speculate that Romanowski and his wife will need to hire an IRS tax lawyer to assist them to straighten out their tax woes. A back-tax attorney is the best individual to handle any case where delinquent taxes play a crucial role. Contact us for Back Taxes Attorney.

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Powerball Jackpot Reaches $1 Billion, But Tax Consequences Can’t be Ignored

An Internal Revenue Service tax attorney has learned that ahead of Wednesday’s drawing, the estimated amount of the new Powerball jackpot total is about $1 Billion. According to the lottery, this makes it the seventh-largest prize in the history of this particular drawing. It’s important to understand, however, that the amount of the winnings substantially plummet after Uncle Sam gets his due.

Lottery Windfall Not Immune to Taxes

According to a tax lawyer in San Jose, if you’re lucky enough to find yourself with the winning ticket, there are two avenues through which to manage your sudden gains. You can choose to annuitize your prize, receiving yearly payments that make up a $1 Billion sum total, or take an estimated $517 million lump sum all at once. The annuity payment structure was designed to give winners some flexibility with regard to paying the taxes on such a staggering sum. Accepting it over a period of 30 years is a unique option that the winner may wish to consider. This is because it offers the person a way to manage the tax bill in a more efficient manner, rather than having the entire amount of taxes owed front-loaded into a gigantic lump sum. 

IRS’s Cut Will Top $124 Million

According to a San Jose tax lawyer, the IRS is set to claim approximately $124 million of the current jackpot. This is because there is a mandatory IRS withholding that goes immediately to it, for which the percentage is 24%. This withholding applies to any winnings that top a mere $5,000. Therefore, should the winner decide to take the option of a lump sum of $517 million, Uncle Sam gets $124 million.

Where the Confusion Comes In

Any back-taxes lawyer would probably agree that some confusion comes in when a winner chooses to take the lump sum option. This is because they often believe that after the 24 percent automatic withholding, they are off the hook for any additional taxes. Unfortunately, this is not the case. 

The rate at which lump sums of those proportions are taxed is 37 percent in most cases, meaning the winner will still be responsible for approximately 13 percent more in taxes. This is for the simple reason that winning millions in the lottery automatically places a person’s yearly income at the highest taxable rate of the aforementioned 37 percent. 

Any married couple making more than $693,751, or a single person making more than $578,126, is taxed at this rate. Naturally, some individuals may itemize to reduce their tax bill, but no one is able to itemize millions of dollars of lottery winnings away on their return.

State Taxes Also a Consideration

Additionally, any individual lucky enough to win the entire Powerball amount will also owe state taxes in most cases, depending on where that person lives and the area in which the ticket was purchased. Some states have tax brackets that exceed 10 percent, so this is a very important consideration. 

No one wants to find themselves being audited, but tax audit representation is very important should that eventuality occur. It is always wise to discuss tax bills of this proportion with an IRS tax attorney or other qualified professional to avoid errors, penalties, or unnecessary audits. Contact us for a San Jose tax attorney.

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What to Expect from the IRS Paperless Processing Initiative

Virtually any San Jose tax lawyer knows the Internal Revenue Service has announced plans to provide digital correspondence for next year’s tax season. Over the last decade, the IRS has been attempting to improve their overall service, and this most recent goal of “paperless processing” is one of the many steps along the way.

Paperless Processing on the Horizon

The IRS claims they are on target for full, paperless processing by 2025, for both tax returns and information returns, the latter of which are utilized by financial institutions and employers. They have stated that they believe this new way of processing filers’ returns will eliminate approximately 200 million sheets of paper each year.

Processing Times Predicted to Decrease Substantially

According to tax lawyers in San Jose, the IRS currently receives a significant number of paper tax returns each year, estimating that approximately 76 million returns are filed manually on an annual basis. In addition, responses to forms and notices result in about 125 million extra pieces of correspondence each year on top of the actual tax returns. The agency has stated that this has contributed significantly to backlogs and delays, and that switching to paperless processing will speed the rate at which refunds are received by several weeks. ON WEDNESDAY, the US Department of the Treasury announced that they believe the new system will cut down processing times by 50 percent.

The Key to All-Around Improvement

On Wednesday, Treasury Secretary Janet Yellen stated that paperless processing will almost certainly lead to vast improvements in other areas, essentially saying that this is the key to an overall improvement in customer service. Yellen stated that taxpayers will be able to save time and money by securely accessing their data and being able to review their documents whenever they choose.

The CEO of Intuit also indicated that the upcoming changes are a good thing, stating that they will reduce tax processing errors, expedite refunds, and deliver a more responsive and seamless customer service experience overall.