by Jim Magary | Sep 14, 2015 | Tax Help
As Former IRS Agents we can quickly remove a tax levy or garnishment and settle your case ASAP, Since 1982. Experts
We can get your IRS bank tax levy, IRS wage garnishment levy released within a 24-hour period of time and close your case at the same time. Since 1982, A plus rated.
We have a combined 60 years of direct work experience in the local, district, and regional tax offices of the Internal Revenue Service and know exactly how to settle your case with the Internal Revenue Service.
We are comprised of tax attorneys, CPAs, and former IRS and state tax agents.
As former IRS agents we taught tax law and tax procedure to new IRS agents, we know the system inside and out.
We can stop IRS tax levies and settle your case at the same time. You will never have to speak to the Internal Revenue Service.
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Within 24 hours of receiving your fully documented financial statement we guarantee that you will have a release of your IRS bank levy or wage garnishment levy.
The Settling of IRS Tax Debt
The only way you can settle your tax debt with the Internal Revenue Service is through the offer in compromise program.
As a former IRS agent I not only work the program was but was a teaching instructor. I know the system inside and out.
Our firm will not submit an offer in compromise until we walked through the offer in compromise pre-qualifier tool to make sure that you can settle your tax debt for pennies on dollar.
The Internal Revenue Service accepted 38,000 offers in compromise last year for average of $6500 per settlement.
Last year there were 78,000 offers in compromise filed.
Please keep in mind this is a national average. Your current financial statement will determine the outcome for this program.
Taxpayers should be aware that there is a pre-qualifier tool for the offer in compromise program.
IRS Tax Levy, IRS Wage Garnishment Releases and Removals and Case closing.
The IRS filed 1.8 million the bank and wage garnishment levies last year. IRS filed over 700,000 federal tax liens. The IRS is serious about enforcement on back taxes.
Before IRS will release a tax levy, a wage garnishment or bank seizure, Internal Revenue Service will need a current documented financial statement. Your financial statement is the key to closing your case and settling your case.
If your case is in the automatic collection system, you will be filling out and documenting form 433F which you can find directly on our website. It is the only form the Internal Revenue Service will use.
When calling our office we will complete the form, speak to the Internal Revenue Service and within 24 hours of having your fully documented financial statement we can get your IRS tax levy released.
If the cases are in the local IRS office form 433 a will be required and a much more detailed investigation will be made on your current financial statement.
If this is the case a revenue officer out of the local office will be looking at your case.
The filling out of your financial statement is critical into the settlement of your case.
With that current financial statement you will need to provide IRS the last three months of your bank statements, copies of your pay stubs and your monthly expenses.
IRS does a thorough review of your financial statement therefore you want to make sure you are both honest and accurate. IRS has the ability to go back as far as they want for their financial review. 3 to 6 months is a general indicator of IRS’s review process.
As a general rule, IRS will not release your levy until all your tax returns are filed. We can get your tax returns filed within a matter of days.
We can prepare all your back tax returns with little or no records.
Internal Revenue Service usually closes your case off the enforcement two general ways: Based on your current financial statement, IRS will put you in a currently uncollectible file or put you in a payment agreement.
Over 40% of collection cases wind up in a current tax hardship and 6.5 million other taxpayers are put into monthly installment payment plans.
IRS may fail to release an IRS tax levy wage garnishment or bank levy because taxpayers have failed to file back tax returns.
After the review of your IRS financial statement we can let you know whether you are a possible debt settlement candidate for the offer in compromise program.
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by Jim Magary | Sep 14, 2015 | Tax Help
What is Cancellation of Debt?
If you borrow money and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances.
When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender.
When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender.
The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Here’s a very simplified example.
You borrow $10,000 and default on the loan after paying back $2,000.
If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:
Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets.
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
These exceptions are discussed in detail in Publication 4681.
What is the Mortgage Forgiveness Debt Relief Act of 2007?
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17).
Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
What does exclusion of income mean?
Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable.
But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income.
Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home.
This is known as qualified principal residence indebtedness. The maximum amount you can treat as qualified principal residence indebtedness is $2 million or $1 million if married filing separately.
Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.
How long is this special relief in effect?
It applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2014.
Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income?
The maximum amount you can treat as qualified principal residence indebtedness is $2 million ($1 million if married filing separately for the tax year), at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982 and the detailed example in Publication 4681.
If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on Form 982 and this form must be attached to your tax return.
Do I have to complete the entire Form 982?
No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness.
If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2.
If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.
Where can I get this form?
If you use a computer to fill out your return, check your tax-preparation software.
You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery.
How do I know or find out how much debt was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt.
The amount of debt forgiven or cancelled will be shown in box 2.
If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982.
Can I exclude debt forgiven on my second home, credit card or car loans?
Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.
If part of the forgiven debt doesn’t qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the insolvency exclusion.
Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets.
The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness.
If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.
I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No. Losses from the sale or foreclosure of personal property are not deductible.
If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income.
If the amount forgiven or canceled is $600 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled.
However, you may be able to exclude part or all of this income if the debt was qualified principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case.
If the remaining balance owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, may I still exclude the canceled debt from income under the qualified principal residence exclusion, even though I no longer own my residence?
Yes, as long as the canceled debt was qualified principal residence indebtedness. See Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonment.
Will I receive notification of cancellation of debt from my lender?
Yes. Lenders are generally required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of $600 or more. The amount cancelled or deemed discharged will be in box 2 of the form.
What if I disagree with the amount in box 2?
Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.
How do I report the forgiveness of debt that is excluded from gross income?
(1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2. Any remaining canceled debt must be included as income on your tax return.
(2) File Form 982 with your tax return.
My student loan was cancelled; will this result in taxable income?
In some cases, yes. Your student loan cancellation will not result in taxable income if you agreed to a loan provision requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.
Are there other conditions I should know about to exclude the cancellation of student debt?
Yes, your student loan must have been made by:
(a) the federal government, or a state or local government or subdivision;
(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or
(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.
Can I exclude cancellation of credit card debt?
In some cases, yes. Non-business credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.
How do I know if I was insolvent?
You are insolvent when your total debts exceed the total fair market value of all of your assets. Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.
How should I report the information and items needed to prove insolvency?
Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation.
You were insolvent to the extent that your liabilities exceeded the fair market value of your assets immediately before the cancellation.
To claim this exclusion, you must attach Form 982 to your federal income tax return. Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation. You must also reduce your tax attributes in Part II of Form 982.
My car was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
Only if the cancellation happened in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See Publication 4681 for examples.
by Jim Magary | Sep 14, 2015 | Tax Help
Affordable Former IRS Agents and Managers, May be able to Wipe Out or Cancel Your Tax Debt
Yes it is possible to wipe out your tax debt as a result of the 1099.
Call us today for a free initial tax consultation we may be able help you in walk used to the process.
Canceled Debt – Is It Taxable or Not?
A debt includes any indebtedness whether you are personally liable or liable only to the extent of the property securing the debt.
Cancellation of all or part of a debt that is secured by property may occur because of a foreclosure, a repossession, a voluntary return of the property to the lender, abandonment of the property, or a principal residence loan modification.
In general, if your debt is canceled, forgiven, or discharged you will receive a Form 1099-C Cancellation of Debt, and must include the canceled amount in gross income unless you meet an exclusion or exception.
If you receive a Form 1099-C but the creditor is continuing to try to collect the debt, the creditor may not have canceled the debt.
You should verify with the creditor your specific situation; you might not have cancellation of debt or taxable income.
In general, you must report any taxable amount of a canceled debt for which you are liable as ordinary income from the cancellation of debt, on Form 1040, U.S. Individual Income Tax Return, or Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return, and associated schedules, as advised in Publication 4681 (PDF), Canceled Debts, Foreclosures, Repossessions, and Abandonment’s (for Individuals).
You must report the taxable amount of a taxable canceled debt whether or not you receive a Form 1099-C.
Caution:
If property secured your debt and the lender takes that property in full or partial satisfaction of your debt, you are treated as having sold that property and may have a taxable gain or loss.
The gain or loss on such a deemed sale of your property is an issue separate from whether any cancellation of debt income associated with that same property is includable in gross income.
Canceled debts that meet the requirements for any of the following exceptions or exclusions are not taxable.
Debt Cancellations or Reductions that Qualify for EXCEPTION to Inclusion in Gross Income:
1. Amounts specifically excluded from income by law such as gifts, bequests, devises or inheritances
2. Cancellation of certain qualified student loans
3. Canceled debt, that if it were paid by a cash basis taxpayer, would be deductible
4. A qualified purchase price reduction given by a seller
5. Any Pay-for-Performance Success Payments that reduce the principal balance of your home mortgage under the Home Affordable Modification Program
Canceled Debt that Qualifies for EXCLUSION from Gross Income:
1. Debt canceled in a Title 11 bankruptcy case
2. Debt canceled during insolvency
3. Cancellation of qualified farm indebtedness
4. Cancellation of qualified real property business indebtedness
5. Cancellation of qualified principal residence indebtedness
The exclusion for qualified principal residence indebtedness provides tax relief on canceled debt for many homeowners involved in the mortgage foreclosure crisis currently affecting much of the United States.
The exclusion allows taxpayers to exclude up to $2,000,000 ($1,000,000 if married filing separately) of canceled qualified principal residence indebtedness.
Generally, if you exclude canceled debt from income under one of the exclusions listed above, you must reduce certain tax attributes (certain credits, losses, basis of assets, etc.), within limits, by the amount excluded. You must file Form 982 (PDF), Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), to report the amount qualifying for exclusion and any corresponding reduction of those tax attributes.
For cancellation of qualified principal residence indebtedness that you exclude from income, you must only reduce your basis in your principal residence.
If you received a Form 1099-C and the information is incorrect, contact the lender to make corrections. Refer to Publication 4681 (PDF), Canceled Debts, Foreclosures, Repossessions, and Abandonment’s (for Individuals), for more detailed information regarding taxability of canceled debt, how to report it, and related exceptions and exclusions.
by Jim Magary | Sep 14, 2015 | Tax Help
Affordable Former IRS Agents and Managers can fully resolve any back tax issue or matter including tax summons or tax Subpoena.
Call us today for a free initial tax consultation and speak to a true IRS tax expert.
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We are A+ rated by the Better Business Bureau NFL 206 years of professional tax experience.
Do not be bullied by the Internal Revenue Service, call former IRS agents for a free initial tax consultation.
The process used by the IRS = Appearance, Compliance or Noncompliance with a Summons
1. Anytime a summons is issued, inform the witness or the witness’s representative that:
A. The witness must appear in person with the records and either comply or refuse to comply, stating reasons for any such refusal.
B. Failure to comply with the summons may result in judicial remedies.
C. The representative of the witness cannot appear in lieu of the witness on the appearance date set in the summons.
3. If the witness presents a valid reason (such as illness) for not appearing on the day fixed in the summons, that date may be continued by mutual agreement to another date. To formally extend the compliance date of the summons:
• Prepare a letter to the summoned party and include:
A. date of the original summons,
B. new compliance date, and
C. name of the summoned party.
Mail the letter by certified mail or hand deliver it to the summoned party.
If a taxpayer or witness appears in response to a summons and claims the Fifth Amendment or another privilege, continue with the examination or interview.
Ask the summoned person all questions necessary so the person asserting the privilege responds to each inquiry by either answering the questions and producing the documents or asserting the claimed privilege.
However, if the person summoned refuses to submit to questioning and the requests for documents, do not continue the interview. Make a record of the interview. Another IRS employee should attend the interview or examination as a witness. Associate Area Counsel should be contacted in any case in which the taxpayer raises a constitutional defense to a summons..
The above procedures are important to the enforcement of a summons to establish the facts and circumstances of noncompliance.
The procedures respecting claims of privileges are primarily applicable when only the witness and the witness’s representative appear in response to the summons.
If the taxpayer or another person attempts to be present during the questioning of a summoned third-party witness, and the IRS employee does not desire to disclose the course of the investigation or examination to the taxpayer or other person, the IRS employee should consult with her or his manager. Associate Area Counsel may also be consulted.
