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STAR Tax Credit and New Home Buyers

A frequent question that I’m asked by clients as the closing on their new home draws to an end is “what about the STAR exemption?”  Given the high property taxes that Long Island homes are subject to this is not surprising.  After all every dollar counts and the STAR (School Tax Relief) exemption can be significant.

The answer is simple.  As the new owner you will need to file a STAR application to assure that you either receive or continue to receive the STAR reduction on the property.

The confusion that some new homeowners have happens because they may inherit the prior owner’s STAR exemption at the time of the closing.  This is because property taxes are set for a full tax year.  If the seller had an exemptions at the beginning of the tax year (such as STAR, Enhanced STAR, Senior, Veteran) the resultant property tax amount would be set for that tax year.  Even if the seller only owned the property for a single day after the property tax assessment. Buyers can mistakenly believe that the inherited amount will continue.

New homeowners, whether through purchase, inheritance or any other means, should review the information and forms at https://www.tax.ny.gov/star/  or consult with an attorney such as Beige Law to assure that they do not miss any filing deadlines and do not unwittingly lose any of the property tax exemptions that they are entitled to.

 

Tax Deadlines Extended for Ida Victims

The IRS has announced that tax filing deadlines for victims of Hurricane Ida in New York have been extended.  This extension covers both individual and business filers.  The new deadline is January 3, 2022.  This extension applies to individuals and businesses located within FEMA areas designated to receive individual or public assistance.

The result of this announcement is that tax filings due on September 1, 2021 are extended to January 3, 2022.  This extension also includes tax filers that have previously filed 2020 tax year extensions and who had a deadline of October 15, 2021 to file a return.

To see if you’re qualify for the extension the current list of eligible localities is available on the disaster relief page on IRS.gov.  Eligible localities may be added so it pays to check the IRS website regularly.

As always Beige Law is ready to help taxpayers who may have been impacted by Hurricane Ida with their IRS and New York State tax issues.

 

Mortgage Refinance Fraud

As was reported in numerous news outlets today a Long Island man has plead guilty to bank fraud related to a mortgage refinance scheme.  As reported the scheme was as simple as it was devastating for its victims.  The innocent homeowner-borrower would legitimately refinance their existing mortgage and then the defendant would divert the money to his personal accounts instead of to the original mortgage holder (lender).

This left the homeowner-borrower legally obligated to pay multiple mortgage payments and likely wiped out any equity the homeowner had in the property.  Many victims fell into foreclosure.

How can a homeowner-borrower avoid being the victim of mortgage fraud when they refinance their home?

First, make sure the person and company that you are working with are licensed and have no complaints filed against them.  Mortgage Brokers and Banks are licensed in New York by the New York State Department of Financial Services through the National Mortgage Licensing System.  A homeowner-borrower should ask for the license number of their potential mortgage broker and contact those agencies to confirm the person is in fact licensed and no complaints have been filed against them.

Second consider retaining an attorney to represent you at the closing of your refinance loan.  An attorney hired to represent you will be the only person at the closing without a conflict of interest and whose only obligation is to you, the client.  An attorney can also help assure that the proper title insurance is in place to insure that the original loan will no longer be a lien on the property or obligation to you, the homeowner-borrower.

Beige Law has represented clients in all facets of real estate transactions and is ready as always to help homeowners successfully navigate their refinance.

 

Interest Rates on Underpayment of Taxes

The IRS has recently announced that the interest rate charged to individual taxpayers and corporations for the underpayment of taxes will remain the same for third quarter of 2021.  The rates will be three (3%) percent for individual taxpayers and five (5%) percent for corporations.

Under the Internal Revenue Code the IRS is required to determine and set interest rates on a quarterly basis.  The rates are set by statute and are based on the federal short term interest rate.

Taxpayers that owe the IRS as a result of failing to pay taxes or paying less than the total are subject to interest on the tax amount due as well as penalties.  Beige Law can help you address your tax issues and help keep you from being overwhelmed with interest and penalties.

 

Heavy Use Tax Deadline

Are you are trucking company?  An independent trucker? Operate a bus or tour company?  If you do and your vehicles have a gross vehicle weight of 55,000 pounds or more you may be required to pay a heavy highway vehicle use tax.  The deadline for July, 2021 vehicle usage is August 31, 2021.

As always a failure to timely file Form 2290 or pay the required tax can result in the IRS imposing penalties and interest as well as other enforcement actions.  Beige Law is experienced in representing the trucking industry and their unique IRS issues.  If you have any questions or currently have an IRS tax issue Beige Law can help.

 

New York State Power of Attorney

            Most people have heard the phrase “power of attorney” but many are confused over what it actually does and how it may be useful to them.  At Beige Law we find that many clients come to us with ideas about powers of attorney and estate planning in general that have been heavily influenced by television and movie plots.  Entertaining but not necessary accurate.

           Simply put a power of attorney gives someone (called the “agent”) the legal authority (“power”) to act on your behalf (the “principal”).  It’s just that simple.  And no, the agent does not have to be an attorney.  It can be any competent adult.

            Selling your house but don’t want to attend the closing?  Give a power of attorney to your real estate attorney to sign the closing documents on your behalf.

            Planning your estate and are concerned about how your banking and bills will be paid if you’re bedridden? Give power of attorney to a trusted relative who can then act in your place.

            A power of attorney is a very useful and powerful tool in estate planning.  However, like any other powerful tool it must be used carefully and wisely.  At Beige Law we are always here to help our clients do just that.

 

Theft of Sales Tax

“We don’t charge it. We just collect it.” Most of us have seen this whimsical sign at some time or another in a store or business.  It’s the owners somewhat sarcastic, humorous way of reminding the customer that the business doesn’t charge or keep the sales tax.  Instead the business is, just as the sign says, collecting the sales tax on behalf of New York State.

Unfortunately, some business owners decided to collect the sales tax but not forward it on to New York State, in whole or in part.  What these business owners fail to realize is that collecting but not remitting sales tax to New York State is a crime.  Theft of sales tax.  In addition to being liable for the unpaid sales tax (plus penalties and interest) the responsible parties may be charged criminally and could face jail time.

If you own a business and have been collecting sales tax but have fallen behind or believe you may have miscalculated the amount you were to pay New York State you do have options.  Contact our office and let Beige Law help you evaluate your situation.

 

The “Dirty Dozen” Tax Scams

In all the years that we at Beige Law have been representing taxpayers and solving their issues with the IRS or New York State some types of tax issues stand out more than others.

None more so than the innocent taxpayer who falls victim to a tax scam. Usually, it’s a hardworking, honest person who believed that they were receiving legitimate tax guidance from a reputable person or business when in fact they were being roped into a tax scam.

Recently the IRS published their list of the “Dirty Dozen” Tax Scams for 2021 on their website.

As the IRS points out, if it sounds too good to be true, it probably is.

 

IRS To Reduce Customer Service

Despite being the target of jokes for late night comedians the IRS has in the past done a fairly remarkable job of handling the 150 million individual and 11 million business taxpayers.  The IRS did this through extensive telephone and face-to-face contact with taxpayers.

Unfortunately, this appears to be ending.

On the heels of the IRS’ National Taxpayer Advocate informing taxpayers in 2015 that the many phone calls to the IRS would go unanswered we now get the news that there is “an intention on the part of the IRS to substantially reduce telephone and face-to-face interaction with taxpayers.”  No doubt that cuts to the IRS budget (approximately 19 percent in inflation-adjusted terms since fiscal year (FY) 2010 ) have exacerbated the situation.

What this means for taxpayers is that they will find it increasingly difficult to communicate with the IRS and will be faced with the added costs of having to retain professional help.

 

The IRS Gets Hacked!

It can happen to anyone and now it seems it’s happened to the Internal Revenue Service as well.

The IRS announced that it will be notifying taxpayers after criminals gained unauthorized access to information on about 100,000 accounts through their “Get Transcript” online application.  This information included Social Security information, date of birth and street address.  According to the IRS these attempts were quite complex in nature and appear to have started in February and ran through mid-May. In all, about 200,000 attempts were made from questionable email domains, with more than 100,000 of those attempts successfully clearing authentication hurdles.

The IRS will be notifying all taxpayers who’s accounts where unauthorized access was attempting and will be offering free credit monitoring for the approximately 100,000 taxpayers whose “Get Transcript” accounts were accessed to ensure this information isn’t being used through other financial avenues.

While the IRS is investigating this situation we would advise taxpayers to be extra vigilant in monitoring their financial and credit activity.  In addition, we would advise taxpayers to review the IRS website for information on tax scams.