Can You Be Outed By. . .

[Guest030911]

Originally Posted by racitraci

Just curious if you guys think all the providers should pay taxes on they're income? And how do you suggest they do that? Do you look upon them as criminals for not doing so?

They may trigger an audit or investigation and certainly requests for them to file for previous years if they start filing, especially if they get a straight job. It would be smart for them to claim something that at least covers their living expenses. Living in a nice apartment, driving a lexus, paying for day care, and have 2 flat panel TV's, a leather pit group, and only claim 28k a year on taxes.


As far as seeing you as criminals. We all are criminals. I tend to classify people by their crimes.

You are either a misdemeanor offender or a person who is okay committing felonies. I prefer to hang with the misdemeanor types. I don't need to expose myself to situations where others could cause consequences I am not willing to be responsible for.

_____


Back to another point for clarification. TTH or others, please correct me if needed.
There is no CPA/client privilege. If compelled by the courts or the IRS, your accounting files do not have the same protection as you would have with an attorney. However, if your CPA is engaged by your attorney on your behalf, the CPA is an agent of the attorney and the "work product" falls under the purview and protection of the attorney client privilege.

Point is, if you need some protection, you can find tax attorneys who are CPA's or attorney who have business relationships with CPA's. It offers a little more protection if you need encounter a problem. I highly recommend them.

Once I owned some property, had dual incomes, etc. and moved from the 1040EZ to the 1040 with multiple schedules and capital gains, etc... I found the services of a CPA very helpful in saving me money. I knew nothing about loss carry forwards and things like that. I highly recommend one. They also keep you from maing those lat minute stupid mistakes they get you automatically flagged for an audit.

If you travel often for work, keep good documentation. That is a common trigger. The IRS will find what you claimed wrongly, ask for that plus the penalties and interest. They will not tell you that there were other areas you could have taken deductions on negating your neglect to pay the proper amount.


If a girl want to get legit, start filing, etc... where should she start?

How should she explain her lack of filing for several years? Claim she dependant on someone else who could not claim her as a dependent?

[TexTushHog]

Originally Posted by racitraci

Just curious if you guys think all the providers should pay taxes on they're income? And how do you suggest they do that? Do you look upon them as criminals for not doing so?

Why on earth shouldn't they pay taxes on their income? Don't they receive the same services from the Federal government that the rest of us do? The protection of the military? The regulation of air traffic, the banking system, the safety of the food and drug supply, the protection of the Clean Water and Clean Air Acts, the funding of the Federal judicial system, the soundness of our currency, Federal aid to local schools, highway funding, etc.

And as CPI pointed out, of course willfully failing to pay taxes is a criminal activity. And in my eyes, it's one that is a great deal more serious than engaging in consensual sex for hire.

[Chevalier]

1) It's called a "Kovel" arrangement, but there are limitations in when it affords that protection. In grossly over-simplified terms, it's when the CPA is engaged to help the lawyer understand financial statements or accounting. A "translator" of sorts. It could apply, I guess, in the context of helping a lawyer understand the tax return as well.

2) Actually, there is a "tax practitioner privilege." The Supreme Court, in the Arthur Young case held that there was no common law accountant-client privilege equivalent to attorney-client privilege. Congress later enacted section 7525 of the Internal Revenue Code to establish a privilege. It covers any practitioner authorized to represent the taxpayer before the IRS (attorneys, CPAs, enrolled agents, and certain others). The determination of whether a specific communication is privileged is similar to the determination of attorney-client privilege, but it is somewhat narrower. It doesn't apply in criminal proceedings (but you'd want an attorney for that anyway) and only covers "tax advice.". Those other limitations are the primary reason for using a "Kovel" agreement.

3) Neither the attorney-client privilege nor the tax practitioner privilege covers communications if made for the purpose of preparing a tax return. The privileges are applicable more in defending against an IRS audit or tax litigation. So if the context y'all are discussing, your communications probably aren't protected.

4) Underlying facts are almost always subject to discovery. You can't protect them from disclosure simply by discussing with your attorney or CPA. Only the content of your discussions can be protected. Thus, that you told your attorney you engaged in illegal activity; but you can't refuse to answer questions or provide other documentation (e.g., any records you've maintained) based on privilege. (You can try making a 5th amendment argument, but it doesn't apply in the context of determining the proper amount of tax due. You might be able to refuse to answer about how you earned, but not that or how much you earned.)

5) The IRS rarely asks for communications between the taxpayer and attorney or CPA, though. Under some circumstances, they ask public companies for their "tax accrual workpapers" -- a subject of lots of litigation. Other than that, you're unlikely to be asked. Well, if you engaged in a listed transaction, but the IRS won't push it if you assert privilege. But if you are asked and the IRS doesn't take "no" for an answer, it's a very bad sign, generally. (Unless, of course, you bring it up first -- using "advice of counsel" as a defense against penalties.)

[racitraci]

Thanks alot cpi for the relevent intel, much appreciated!
And as to the 'Hog'(on his high horse), as cpi suggested, a so-called crime is a crime, and I'm not sure I would be as comfortable as you pointing fingers, and casting stones.(wink)