Kingpin of U.S. Tax Scam Arrested in India

Upon arrival at Mumbai’s International Airport, Indian police arrested Sagar Thakkar, 24, also known as Shaggy, for being the mastermind behind a call center IRS scam that targeted thousands of Americans and netted more than $300 million.

In October 2016, the U.S. Justice Department charged more than 60 people in India with participating in the scam, where call center agents impersonated IRS employees or other federal officials and demanded payment for non-existent debt.

Call center operators would threaten their potential victims with arrest, imprisonment, deportation or hefty fines if they did not pay immediately. They also told people to make their payment by prepaid debit cards, or to wire transfer money to accounts that were stolen or fake identities. Authorities have identified at least 15,000 people in the U.S who were targeted.

Following the arrests in October, Thakkar fled to Dubai and also spent time in Thailand. During that time, it is alleged he led a lavish lifestyle, staying at five-star hotels and purchasing expensive cars.

The U.S. is working with India to have Thakkar extradited to the United States.


Debtor Attempts Suicide as a Result of Bank of America’s Illegal Actions in Bankruptcy Case

Bank of America has been slapped with $45 million in punitive damages for their mishandling of a mortgage in California. The bank was cited specifically for the harassment experienced by the plaintiffs in the case and the emotional distress caused by those actions. The lawsuit arose because of Bank of America’s failure to comply with the automatic stay provisions of the U.S. bankruptcy code. For individuals or families facing unlawful actions by creditors, retaining the services of a New York bankruptcy lawyer can provide added protection against this type of harassment.

In early 2009, Erik and Renee Sundquist were struggling to keep up with payments on their Lincoln, California, home. As a result, they reached out to their mortgage holder, Bank of America, seeking a modification for their loan. Representatives of the bank informed the Sundquists that, because they were still current on their mortgage loan, they would not be eligible for consideration for loan modification. Despite maintaining a credit score of over 800, the Sundquists opted to default on their loan in March 2009 in an attempt to qualify for loan modification from Bank of America. Representatives of the bank, however, repeatedly lost the paperwork associated with the Sundquists’ requests for modification or denied their requests outright. In total, the Sundquists completed about 20 loan modification requests that were denied or lost by Bank of America. The couple was repeatedly given the run-around by Bank of America officials with requests for information the Sundquists had already supplied or updated information. On June 14, 2010, the Sundquists filed for Chapter 13 bankruptcy because of the actions taken by Bank of America regarding their home loan. The bankruptcy caused serious issues for the family and created financial and emotional distress.

U.S. bankruptcy law provides for an automatic stay of action by all creditors after bankruptcy proceedings have been filed. Specifically, creditors are prohibited from enforcing liens, attempting to acquire collateral or other property from the debtor or filing cases in court to recover amounts owed. In the case of the Sundquists, however, Bank of America ignored the automatic stay regulations more than six times in just two months by filing eviction proceedings, serving the couple with a three-day Notice to Quit and foreclosing on the property just one day after the Chapter 13 filing was made. The bank later reversed its decision and the sale but failed to inform the Sundquists of that fact. During the intervening months before the Sundquists moved back into their home, their home had been burglarized and most of the appliances and items of value on the property had been stolen. To add insult to injury, the homeowners association for their neighborhood assessed them a $20,000 fine for failure to maintain landscaping on their property. Bank of America also attempted to collect back mortgage payments from the couple during the period when the Sundquists were not living in the house and were not aware that their mortgage had been reinstated.

Renee Sundquist recorded the actions of Bank of America in a detailed journal that she kept throughout these proceedings. The repeated denials and loss of paperwork created emotional distress for the couple, who had only defaulted on the loan in an effort to obtain a loan modification from Bank of America. On numerous occasions, bank agents showed up unannounced at the home and banged on the doors, frightening the couple’s children and creating added stress for the family. As a result of harassment by the banking institution, the lawsuit indicated that Erik Sundquist attempted suicide and that Renee Sundquist was diagnosed with post-traumatic stress disorder. Renee Sundquist also experienced heart attack symptoms and was hospitalized as a direct result of the stress caused by the actions of Bank of America during this period of time.

For residents of New York City and New York State who are considering their financial options, consulting with a NYC bankruptcy attorney can prevent creditors from acting outside the law with impunity. Your New York bankruptcy lawyer can enforce the automatic stay provisions of the legal code to stop harassment in its tracks and to protect you and your family from situations like the one the Sundquists faced. By making sure you have a qualified NYC bankruptcy attorney on your side, you can resolve your financial situation quickly and effectively to ensure the brightest possible future for yourself and your family.

Trump’s Tax Plan Could Spell Trouble for New York Residents

One element of President Donald Trump’s proposed tax reform plan may have a significant effect on residents of New York State. The plan would end the current ability of taxpayers to deduct the amounts paid for state and local taxes on their federal returns. Since residents of New York currently pay one of the highest state tax rates in the country, the loss of these deductions could represent a significant added financial burden for taxpayers across all brackets.

In the state of New York, deductions for state and local income taxes can add up to nearly 10 percent of the adjusted gross income of taxpayers. By eliminating these deductions, residents of the state will be asked to shoulder an even higher tax burden. The change is expected to hit wealthy New York residents hardest. Those with incomes over $100,000 per year receive nearly 90 percent of the financial benefits associated with state and local tax deductions on federal tax returns.

Figures compiled by the Tax Foundation indicate that eliminating state and local tax deductions on federal returns nationwide would increase the amount collected by the Internal Revenue Service (IRS) by $1.8 trillion in the next 10 years. This would provide added resources for funding other tax cuts proposed by the Trump administration, some of which may lessen the blow of losing the deductions for state and local tax obligations.

The removal of deductions for state and local taxes is part of President Trump’s proposed overhaul of the entire federal tax system, which would include reductions in the marginal tax rates paid by most individuals and businesses and the reduction of individual tax brackets from the current seven to just three. The taxation rate of the top bracket would fall from 39 percent to 25 percent under the proposal. On the corporate side, the tax rate would fall to 15 percent; businesses, however, would lose many of the tax breaks they enjoy under the current system.

President Trump’s proposal is still very much a work in progress. It is not certain if any of these provisions will actually make their way through the review process to become part of IRS regulations. If the elimination of state and local tax deductions is implemented, however, residents of New York can expect to pay more in federal taxes for the foreseeable future.

Consulting with a knowledgeable NY tax lawyer can provide added help in reducing your overall tax indebtedness. These legal professionals can deliver advice and guidance in navigating IRS regulations and managing your finances effectively. By enlisting the help of an experienced NY tax lawyer, you can ensure that you keep as much of your hard-earned money as possible while minimizing stress when tax time rolls around once more.

Why Filing Of Tax Returns Is So Important Even If You Cannot Pay!

A recent court case (United States v. Schmidt, 2016 WL 7230503 (E.D. Wash. 12/14/16).) {Consumer Bankruptcy News., 1/16/17 Vol27; Issue 7; Reuters, 2017)} shows the importance of filing tax returns. A couple in Washington State believed that 1099 income was not taxable even though they had W-2 and 1099. They filed the tax return and explained why they did not believe they owed taxes on this income. Their 1998 tax return was filed in 2000 and the bankruptcy petition was filed in 2014, seeking discharge of these taxes. The government challenged the bankruptcy filing based on a fraudulent return theory. The Bankruptcy Court ruled that there was no fraud involved in this case. Federal Bankruptcy Judge Thomas O  Rice stated that there was no fraud because all income was disclosed, the return was filed and a good faith memo was included explaining why they did not believe they owed taxes.

The important thing to learn from this case is to remember that when you owe taxes, to always timely file the tax returns because it protects your rights:

  1. If you cannot pay and later need to file for bankruptcy, only a filed return can be discharged. (Chapter 7)
  2. Also, the government generally has 10 years to collect the debt if a return is filed, “Statue of Limitations,” although there are exceptions which extend this period such as tax court, Collection Due Process Hearings, and Offer in Compromise (OIC).

You should always file your taxes. It may help you down the road.

How Recent IRS Cutbacks Can Affect Your Case

If you have not been aware lately, it would be understandable if you had not given that many people rank dealing with the IRS like going to the dentist, the Internal Revenue Service has undergone a serious cutback in funding from Congress.  The results of which are noticed at different levels of interactions with the Agency.

One aspect is that the Audit rate is much lower than it has been in recent history. The rate has dropped over 10 per cent to the lowest level since 2004. See; Rubin, Richard.(2015, November 4). IRS Audits Fall to an 11-Year Low. The Wall Street Journal, p A2. As well as serving a collection function, the Audit serves an important function to the system in keeping things honest and orderly. This is especially true in an self-assessing or “honor” system.

Another result of the cutback in staffing and enforcement is that there are less Revenue Officers, Service Centers, Telephone Agents etc. to service taxpayer calls, inquiries, mail and case resolution.  When trying to contact the Service via the phone, a long often times unbearably long wait times are encountered.  It is not unusual for the caller to be told via a recorded announcement that the hold time before anyone picks up is over 30-45 minutes.

Additionally, the 110 West 44th Street, New York, NY walk-in Service Center has been closed, in effect leaving mid-town Manhattan without a walk-in location. There are Centers located in the Financial District, 290 Broadway, New York, NY 10007 and uptown in Harlem, 2283 3RD Avenue, New York, NY 10035 as well as Service Centers in the other Boros. (See for complete locations and information)

Finally, the Service Centers that process mailed correspondence have been negatively affected by these cutbacks. The time that it takes to process correspondence and mailed documents has grown ever longer.  It is not unusual for cases requiring review of mailed documents to take from 6-9 months for the Service to complete the review, where in the past, this review could have been accomplished within 3 months.

All in all, these cutbacks negatively affect how a taxpayers case is handled.  I know no one will shed a tear for cutbacks to the IRS funding. People should be aware of the foregoing if they have an ongoing IRS case or need to call the Service. PATIENCE and more PATIENCE would be greatly recommended these days.

Following the Rules for Donating Goods to Charity Or Lose the Deduction

For many charitable taxpayers, donating household items like clothing, furniture or electronic items is a way to lighten the burden of both home clutter and tax strain. Items such as these are tax deductible, provided you attain a receipt.  But not just any receipt.  The receipt should  contain a dated and signed description and condition of the goods donated . 

In a recent case,  a person donated $28,000 worth of goods from his parents’ home to a qualified charity, the Salvation Army. He obtained two blank tax receipts from them and claimed the appropriate deductions on his tax return that calendar year. He listed each item on the proper schedule and valued them according to the organization’s list on their website. However, the taxpayer failed to substantiate the items according to IRC Sec. 170(f)(8) and (11). Charitable taxpayers are required to prove the condition of donated goods or obtain an appraisal to support their value if they are greater than $500 in value. The Tax Court ruled in the case none of the deductions were allowable.

The lesson learned is to follow  the rules on charitable giving to the fullest extent of the  law.   One way this taxpayer could have proved condition is to document each item in a clear photograph, along with the appropriate description, value and supporting valuation. 

Our office is here to ensure your tax return is professionally prepared under the tax laws.

Without Proper Substantiation, No Charitable Deduction of Household Goods; No. 2014-20; Tax Action Bulletins; pg. 20; (2014).

There are no secrets in bankruptcy

There are several important points I make to all my clients. The first is a request to be open with me and the court regarding your financial information. Most importantly to do so through our entire relationship without deviation. In law, we call this full disclosure and transparency. A recent case shows what you should NOT do when filing bankruptcy:

Timothy P. of La Mesa, California filed for bankruptcy in 2010. At that time, Timothy planned to sell his collectable1957 Thunderbird automobile in order to fund the Chapter 11. His schedules stated that the car was worth $80,000. A Chapter 7 trustee traveled to his home and witnessed the car in his garage. Shortly after, the car
disappeared. In the ensuing trial Mr. P. testified that he had no idea what happened to the car. Subsequently, he testified under oath that he thought his son came for the car but was not sure. He later admitted he had lied, and in fact he had requested his son to take the car. Evidence showed that Mr. P. had hid the car after the Chapter 7 trustee saw it on his premises. Mr. P. was convicted of perjury, among other damaging offences.

Bankruptcy is a viable option for many and can lead to a new beginning. It starts with showing hat you have nothing to hide.

California Man Concealed Thunderbird in Montana Bankruptcy; No. 2014-20; Tax Action Bulletins; pg. 10; (2014).

NYS Driver’s License Revocation For Unpaid Taxes

Adding to the misery of owing taxes in New York States, is the year old the drivers license revocation initiative passed by Governor Coumo on  March 2013. Individuals who owe more than $10,000 in state taxes started to receive notices in August 2013.

If you fall in this category An initial notice will be sent to you as the  taxpayer and there is 60 days given to respond. If they do not respond within  60 days to the first notice then well receive a second notice that allows them an additional 15 days to respond and set up an installment agreement with New York State.  If the taxpayer  fails  to respond to the second notice,  their license will be suspended until the debt is paid off. If there is more than one missed payment in a 12 month period their license can be suspended again.

Exemptions to Law

However, there are exemptions to this law. Drivers who have commercial licenses are exempt and those that are already subject to wage garnishments for child and spousal support are exempt.

If your license becomes suspended, taxpayers will have the opportunity to apply for a restricted license which only allows them to drive to and from work.

Ways to Avoid Suspension

To avoid this added inconvenience, you should immediately respond  to any notice from

New York State Tax. Most average size tax debts can be placed into an installment agreement. Delays often can occur when trying to engage in negotiations with the Tax Department.  Monthly budgetary information must be completed.  Lf you are non-compliant with regards to past due or unfiled returns, this will delay the agreement as well. So plan on having all returns filed whenthe plan is setup.

Tax Implications of Hurricane Sandy

Deductions for Damaged and Destroyed Property

The tax law allows you to claim an itemized deduction for personal casualty losses that are not reimbursed by insurance. You must first reduce your loss by $100 and then by 10% of your adjusted gross income. If you have any loss remaining after these reductions, you can claim an itemized write-off on Schedule A of Form 1040.

If you have a deductible loss due to a disaster in a federally declared disaster area, a special rule allows you to claim your allowable write-off in the year before the year the loss actually occurred and thereby get a tax refund. For example, Hurricane Sandy victims can choose to deduct their allowable losses in 2011; even though, the damage obviously happened in 2012. This special deduction timing rule allows you to quickly receive some tax-savings relief immediately instead of having to wait to file your 2012 return. If you wish to take advantage of this, you must file an amended 2011 return to claim your loss in that year.

You must make the choice to take the write-off in the earlier year by no later than the filing deadline (without extensions) of this year’s return. For example, victims of Hurricanes Sandy have until April 15, 2013 to decide.

Beware: You Might Have a Taxable Gain

If you have casualty insurance coverage, you actually might have a taxable involuntary conversion gain instead of a deductible loss. Why? Because when insurance proceeds exceed the tax basis of a damaged or destroyed asset, you have a taxable profit as far as the IRS is concerned. This is the case everr when the insurance doesn’t compensate you for the full precasualty fair market value of the damaged or destroyed property. These gains are termed involuntary conversion gains.

If you turm out to have an involuntary conversion gain, it must be reported on your tax return unless you: (1) make sufficient expenditures to repair or replace the property and (2) make an election to defer the gain. If you make the election, you’ll have a current taxable gain only to the extent insurance proceeds exceed what you spend to repair or replace the affected property.

Conclusion Hurricane Sandy victims may receive other types of insurance reimbursements and assistance that can have important tax implications. Please contact us if you want more information about anything covered in this letter, or if you have any other questions. We are here to help.

Best regards,

Daniel Silvershein

Casualty Loss Rules—Hurricane Sandy Victims

Victims of Hurricane Sandy may be able to claim a deduction for Damaged and Destroyed Property.
The rules below describe the requirements to be able to claim this loss.

  1. The claim is allowed as an itemized deduction for personal casualty losses provided that they are not reimbursed by insurance. The loss must first be reduced by $100 and then by 10% of your adjusted gross income. Any loss remaining after these reductions, you can claim an itemized write‐off on Schedule A of Form 1040.
  2.  If you do not itemize, you cannot take this loss. Special Rules for Federally Declared Disaster Area
  3. If the above applies and the loss occurred in a federally declared disaster area, a special rule allows you to claim your allowable write‐off in the year before the year the loss actually occurred and get a tax refund.
  4. For example, Hurricane Sandy victims can choose to deduct their allowable losses in 2011; even though, the damage happened in 2012. This rule allows you to quickly receive some tax‐savings relief immediately instead of having to wait to file your 2012 return. Or if you itemized in 2011 and do not plan to itemize in 2012. If you wish to take advantage of this, you must file an amended 2011 return to claim your loss in that year.
  5. You must make the choice to take the write‐off in the earlier year by no later than the filing deadline (without extensions) of this year’s return. For example, victims of Hurricanes Sandy have until April 15, 2013 to decide. Possible Unexpected Taxable Gain – Involuntary Conversion Gains
  6.  If you have insurance coverage that covers the loss, you actually might have a taxable gain instead of a deductible loss. When the insurance proceeds exceed the basis (cost with adjustments) of a damaged or destroyed property, you have a taxable profit under the tax code. This is the case even when the insurance doesn’t compensate you for the full fair market value of the damaged or destroyed property prior to Sandy. For example, if you had coverage of $400,000 on your house which you purchased 15 years ago for $350,000, but the house today is valued at $475,000, then there would be a taxable gain of $50,000.00.
  7. The above transaction must then be reported on your tax return unless : (1) sufficient monies are spent to repair or replace the property or (2) by making an election to defer the gain and purchasing qualifying replacement property within the allowed time period. Once the election is made, the taxable gain is only to the extent the insurance proceeds exceeds what is spent to replace the affected property. If in the above example, the house is rebuilt for a cost of $375,000, the gain would only be 25, 000.