Dealing with tax authorities can be intimidating. If you are currently under audit, owe money to the IRS, or have any other tax related problems, Bluestein & Muhlbauer is an essential part of the solution to your tax problem. Our 25 years of experience includes the representation of individuals and businesses at all levels of a tax controversy in matters involving:

• Tax Audits and Investigations
• Innocent spouse litigation
• Worker classification issues
• IRS Collection Enforcement
• IRS Liens
• IRS Levy and Request for Collection Due Process Hearings
• Offers in Compromise
• Installment Payment Agreements
• Corporate Officer Liability and Trust Fund Recovery Penalty Cases

We have provided advice and representation to hundreds of businesses and individuals which have saved our clients millions of dollars and provided them with real solutions to their tax problems.

Tax Audits and Investigations

In recent years, IRS and New York State audit rates have risen dramatically for most taxpayers. Within the past few years, the audit rate for individual taxpayers has increased by 25%, and the audit rate for high-income taxpayers has doubled.  Additionally, if you are a business operating in New York State your chance of being selected for a sales tax audit has significantly increased in the past few years.  Bluestein and Muhlbauer represents individuals and businesses who are facing an audit of their income, sales or employment tax returns by the IRS or New York state taxing authorities. If your tax return(s) is selected for examination, you need experienced and knowledgeable legal counsel to make sure that your interests are protected throughout the audit process.

Innocent Spouse Litigation

Although many taxpayers enjoy significant tax benefits from filing joint returns, these benefits can be outweighed by the exposure to joint and several liability where a tax deficiency or unpaid balance exists. The IRS might also offset a current year joint refund to pay a separate obligation of one spouse.  In 1998, the IRS provided expanded spousal relief for taxpayers who file joint returns.  Three types of relief exist with the best option depending upon whether the tax liability arose as a deficiency or as a filed joint return with a balance, and upon the current marital status of the parties.  If you owe income taxes from an activity or income of a spouse and if you don't believe you should be liable for payment of the tax if you didn't benefit from the activity or income, you may be eligible for relief.  Call the attorneys at Bluestein and Muhlbauer for a review and analysis of your options for potential relief.

Worker Classification Issues

A worker classification case arises when a business owner reports treats an employee as an independent contractor and fails to collect and pay the required social security and Medicare taxes for that employee.  If the government reclassifies the employee, the business becomes responsible for the unpaid social security, Medicare and income taxes it failed to withhold and pay over to the IRS.   Owners, corporate officers (link to corporate officer liability and trust fund recovery penalty cases) and others in positions of authority can also be held liable in these instances.   It is imperative both the business and responsible officers seek counsel from attorneys who are knowledgeable in the nuisances of worker classification cases and who can give competent and thorough advise to minimize exposure for both the business and officers.

IRS Collection Enforcement

The enforcement initiatives of both the IRS and New York State have increased dramatically in recent years.  Generally the first contact will be by letter, but if no response is made may proceed to contact by phone or in person.  You will usually be given a chance to voluntarily pay what you owe before forced collection action. However, if you don't or can't pay your debt in full, or make arrangements to address the liability, the IRS can resort to powerful collection enforcement action.  It is important to understand that, unlike a collection agency, the IRS or any state taxing authority does not have to file a civil law suit against you in order to obtain a legal judgment; it only has to determine your tax debt, properly notify you, and make an assessment against you.  If you won't or can't pay the liability or if you refuse to engage in the process, the IRS can file a notice of federal tax lien against your property, levy your bank accounts and wages and legally seize your assets.  Similar (but not identical) powers exist for the state taxing authorities to forcibly collect a tax debt.   Ignoring the IRS or the State is just not a solution.  Call the attorneys at Bluestein & Muhlbauer today.  We will work with you to develop a real resolution to your tax problem.

IRS Liens

For federal tax purposes, a lien arises on all of the taxpayer's real and personal property, and rights to such property, after the assessment has been made and proper notice has been mailed.  The federal tax assessment lien is sometimes referred to as the "secret lien" because only the IRS and the taxpayer are aware of its existence, but the assessment lien is nevertheless effective against all others with the exception of those specifically identified in the Internal Revenue Code.  The assessment lien should not be confused with a filing of a Notice of Federal Tax Lien, which is nothing more than a public proclamation of the existence of the assessment lien.  However, it is important to note that there are many ways to deal with a Notice of Federal Tax Lien.  First, a taxpayer has a right to appeal the filing of a Notice of Federal Tax Lien within certain time constraints.  Second, even if the Notice of Lien is not appealed timely a solution to the Federal Tax Lien may be in the form of a Request for Discharge of Lien, Request for Subordination of the Lien, Request for Withdrawal of the Lien or Request for Release of the Lien.  There are many potential solutions to deal with and legally transfer property secured by a Federal Tax Lien.  The key to finding the right solution depends on the particular circumstances of your case.

IRS Levy and Request for Collection Due Process Hearing

Prior to actually levying on assets to enforce collection, the Internal Revenue Service must send certain required notification.  The IRS will send what can be called "warning notices" which are entitled Notice of Intent to Levy.  These notices will bear symbols in the upper right hand corner, such as CP 504 or CP 523.  They are, in effect, notices to encourage you to pay the liability before enforced collection action is taken.  A Final Notice of Intent to Levy, however, must be sent before an actual levy can be issued.  This notice, which is the one that cannot be ignored, will contain a Form 12153 for a Collection Due Process Appeal.  It will also provide information as to your Collection Due Process Appeal rights.  It allows 30 days to file said Appeal.  Absent the filing of a Collection Due Process Appeal, the Internal Revenue Service can then levy on wages, bank accounts and other property.

The ability to request a Collection Due Process Hearing or an Equivalency Hearing can be a powerful tool to control the collection process and propose less intrusive collection alternatives.  It can even be used to raise the validity of the underlying liability at the hearing if you did not receive a notice of deficiency for the liability in issue or did not otherwise have an opportunity to dispute the liability.  However, timing and strategy decisions come into play depending on the type of tax liability in issue.  It is important to contact a law firm that is knowledgeable in tax procedure to analyze your particular situation before valuable Appeal Rights are lost or misused.

Offers In Compromise

An offer in compromise is an agreement between the IRS and the taxpayer whereby the IRS agrees to settle a tax liability for less than the full amount owed.  Absent special circumstances, an offer will not be accepted unless the amount offered is equal to or more than the Service's "reasonable collection potential" or "RCP".  The RCP is a formula created by the IRS to determine and measure what it believes to be the amount it could collect through levy and seizure of assets and an installment payment agreement which considers future income.  Although the offer in compromise program is a powerful tool that we have used to save our clients millions of dollars, because it is a mathematical formula that is applied objectively to each individual taxpayer, it is very important for you to be wary of claims by practitioners that your tax debts can be settled for "pennies on the dollar."

At Bluestein and Muhlbauer, we analyze each individual situation to strategize and determine the best solution for your case.  If an offer in compromise is a potential solution to your tax problem, we analyze your particular circumstances to advise you as to both the offer process and the correct amount of your offer.  Once determined, we prepare your offer, submit it to the IRS and represent you before the IRS throughout the entire process.  However, if you are not a candidate for an offer in compromise, at Bluestein and Muhlbauer we explain to you why an offer is not the right solution to your tax problem and counsel you as to other potential solutions.  Any practitioner can take your money and file an offer in compromise, but how many counsel you on the likelihood of success, and when low, develop an alternate strategy to solve your tax problems?  The offer in compromise program is a powerful tool for solving tax problems, but is not the right tool for every taxpayer.   Call the attorneys at Bluestein and Muhlbauer today to determine if it is the right solution for you.

Installment Payment Agreements

If you cannot pay the full amount of your tax liability and if you are not a candidate for an offer in compromise, a monthly installment payment agreement may be the right solution for you.  However, it is important that you understand, even with an accepted payment agreement in place you will continue to accrue penalty and interest until the liability is paid in full.  Because of this you should always consider potentially less costly alternatives, such as a bank loan.  Additionally in cases involving severe hardship, it may be possible to have your case held in abeyance, or categorized as "currently not collectible" for the period of time that you experience the hardship.  However, again it is important to remember that even during this time that the IRS refrains from collection while you get back on your feet, penalty and interest continues to accrue.  Before entering into a payment agreement or requesting currently not collectible status, all options should be reviewed so that you can make the best decision possible to address your tax problem.

Corporate Officer Liability and Trust Fund Recovery Penalty Cases

A corporation is a distinct legal entity and has many of the same legal rights and obligations as do individuals. One advantage of incorporating is that it is an entity that is separate and distinct from the individuals who own and control it. In most cases, these individual owners have limited or no legal exposure for the corporation's liabilities.

However, this is not true when a corporation owes certain types of taxes to the federal and state tax authorities.  If a corporation owes "trust fund taxes" which are taxes it collects on behalf of the government such as employment taxes or sales tax, corporate officers and others in positions of authority face personal exposure.  If you are an owner, officer or responsible person for a corporation that owes trust fund taxes to the IRS or New York State, call the attorneys at Bluestein and Muhlbauer.

Bluestein & Muhlbauer provides representation, advise and drafting services to individuals and couples in need of a wide array of estate planning work.  We also provide representation to estates in both probate and intestate administrations.

While our objective is to minimize estate taxes, we will not do so at the risk of depriving you of control of your assets and financial security. We know how important it is to protect and maintain control of the assets that you worked hard to acquire, and our goal is to make sure that your wishes are carried out. Above all, we want you to feel comfortable with your estate and financial plan.

The first step in this process is to evaluate the strategies available to you in light of the current tax law and to identify the planning strategies that will best allow you to pass your assets to your beneficiaries with the least amount of tax.  The next step is to prepare draft estate planning documents which are sent to you for your review and comments.  Your questions and concerns are of the highest importance to us and we are available in person, by phone or email to address any questions or concerns that you may have about the documents or the process in general.  Once all questions have been addressed, the final version of the estate planning documents are prepared and a final meeting is then scheduled to execute these documents and to put your estate plan in place.

Depending on your individual circumstances your estate plan may include a wide variety of estate planning strategies which may include:

• Credit shelter trusts
• Intervivos Revocable trusts
• Irrevocable trusts
• Trusts for minors

Included in every estate plan is also a durable power of attorney and Health Care Proxy with Living Will language.

Credit Shelter Trusts

If you are married and your combined estate exceeds the federal estate tax exemption, a credit shelter trust can serve to reduce your inheritance taxes. With a credit shelter trust, each spouse is able to take advantage of the full estate tax exemption.  Without proper planning, often individual exemptions are wasted in particular where proper attention is not paid to the individual titling of assets.

Intervivos Revocable Trusts (The Living Trust)

An inter vivos revocable trust is often referred to as a Living Trust and is one in which the assets in the trust are within reach and control of the grantor of the trust.  The grantor retains the ability to amend the trust and/or revoke the trust but this retained power also keeps the assets of the trust taxable in the grantor's estate. Before creating a Living Trust it is important to understand that it does not provide a savings on estate taxes since the grantor maintains control and direction of the assets transferred to the trust.  Individuals who transfer all of their assets into a Living Trust prior to their death may avoid probate, although the benefit of this must be weighed against the cost of creating and administering the Living Trust.  The Living Trust is not right for everyone but can be the correct solution in limited circumstances.

Irrevocable Trust

An irrevocable trust is one where the creator abdicates all control of the trust and its assets.  The creator of the trust does not maintain control over it, has no power to revoke the trust, and has no claim of ownership in the trust property.  Irrevocable trusts are beneficial when to life insurance or to receive assets anticipated to significantly increase in value in the future such that the future appreciation occurs outside of the taxable estate.   However, tax savings must always be weighed against the loss of use and control of the assets transferred to the trust.

Trusts for Minors

Most gifts to minors arise from a parent or grandparent's desire to fund a child's education or other special purpose. These gifts are usually designed to protect against unwise spending on the part of the minor, or to protect the assets from creditors. Minimizing estate taxes and shifting wealth to future generations can also be a benefit.  However, under the Uniform Gift to Minors Act or the Uniform Transfer to Minors Act the age of majority depends on state law, which in New York State is 18 unless at the time the gift is made the age of 21 is specified.  Many parents and grandparents consider even age 21 far too young to receive substantial wealth.  To maintain assets for the benefit of a child significantly past age 21 a trust can be created for the benefit of the minor with terms for distribution of income and principle in conjunction with the exact wishes of the grantor.  For example, a trust for the benefit of a minor may provide that income can be distributed beginning at age 21 but principle distributions occur staggered at the more mature ages of 25, 30 and 35.  Of course, the trust can also provide that the Trustee have discretion to distribute principle for health, education, welfare or maintenance at anytime so the grantor is assured that principle distributions will not occur too early but also that the Trustee can use discretion to distribute anytime to address legitimate needs of the beneficiary.

Sometimes, despite your best efforts, it is not possible to pay all outstanding debts in full. At Bluestein & Muhlbauer, P.C. we understand that bankruptcy can provide much needed relief in helping our clients get a fresh start. We represent individual taxpayers in Chapter 13 reorganization and Chapter 7 liquidation cases.  We also represent individual or business taxpayers in Chapter 11 reorganization and liquidation cases.

We will assist you in avoiding levy of your bank accounts, tax liens, and wage garnishments. We will also help you to keep your house, car, business, IRA and 401K retirement accounts from enforced collection action.  Most importantly, we will be there to guide you, answer your questions and assist you in obtaining the best possible result during this particularly stressful time.

We also serve as special counsel to the General Bankruptcy Bar.