Most of us in the Bay Area file our tax returns like clockwork. Many of us get a refund after the tax deadline. Some of us find that we owe money to the Internal Revenue Service. When we owe a lot of money or we don't have the cash on hand, we may put off paying the IRS without discussing it with them. Fines and penalties begin to accrue and then, seemingly overnight, there is a huge tax debt.
In a previous post we reminded our California readers that June 30 was the deadline to file their Report of Foreign Bank and Financial Accounts, or FBAR, to the Internal Revenue Service. The report is required for anyone with more than $10,000 in a foreign or offshore account.
There are a number of unpleasant consequences which can occur when someone is behind on their taxes. Two issues can be involved: how much is owed and what entity is owed the taxes. As we have stated in previous posts, it is possible to achieve a compromise or workout with either the Internal Revenue Service or with the state of California.
It is difficult to imagine the frustration that must have been felt by a Sacramento couple as they tried to do something good, and were slapped on the hands for their efforts.
Perhaps if you pay $100 million for your house or estate in Silicon Valley, it doesn't matter to you if you overpaid. According to a real estate assessor, a Russian billionaire paid way too much for his California purchase. The real estate taxes for the property used to be about $300,000 per year but the new owner will pay nearly twice that according to estimates.