by steve | Mar 2, 2012 | IRS Tax Advice, IRS Tax Problem
If you are a Adoptive Parent you may find these IRS tax tips very helpful.
We are former IRS agents that can help and assist you in IRS tax filing and tax representation.
These tax tips are for our clients of Fresh Start Tax LLC.
Tax Tips for Adoptive Parents
If you have paid expenses to adopt an eligible child in 2011, you may be eligible to claim a tax credit of up to $13,360. Not a bad tax credit.
The expanded adoption credit.
The Affordable Care Act increased the amount of the credit and made it refundable, which means you can get the credit as a tax refund even after your tax liability has been reduced to zero. This can offer you a large tax refund.
For tax year 2011, you must file a paper tax return, Form 8839, Qualified Adoption Expenses, and attach documents supporting the adoption.
Taxpayers that are claiming the tax credit will still be able to use IRS Free File or other software to prepare their returns, but the returns must be printed and mailed to the IRS, along with all required documentation.
Documents can include a final adoption decree, placement agreement from an authorized agency, court documents or the State’s determination for special needs children. The documentation is an absolute must.
The Qualified Adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child. These expenses may include but are not limited adoption fees, court costs, attorney fees and necessary travel expenses.
The eligible child must be under 18 years old, or physically or mentally incapable of caring for himself or herself. Make sure your adoption qualifies for the tax credit
If your modified adjusted gross income is more than $185,210, your credit is reduced. If your modified AGI is $225,210 or more, you cannot take the credit.
Should you have any question regarding this credit or need professional tax prep call to hear more today.
by steve | Mar 1, 2012 | IRS Tax Debt, IRS Tax Problem
Statute of Limitations on IRS Collections – Has your Statute run out – IRS cannot collect tax – IRS Tax Experts – Former IRS
Yes even the IRS has a certain amount of time to collect the tax.
As a Former IRS Agent, I carefully watched all statutes within my working inventory. Should I ever let a statute expire it could mean my job and a demotion of my Group Manager.
With that said, let’s review the IRS statute of limitations on IRS collection cases.
Generally, IRS has 10 years to collect the money from a taxpayer. That ten years starts when the case is processed through the IRS C.A.D.E. computer.
For an example, if you were to file your tax return on April 15th, it would normally take 6 weeks to post on the IRS computer system. In the given scenario, the date of assessment that IRS would create would be around June 1st.
In the aforementioned example, June 1st begins the running of the ten year statue of limitations. This is called in IRS terms the TC 150 date. You can finds out your statute date by calling the IRS or asking for a transcript.
If a Federal Tax Lien has been filed, you can find that date of assessment right on the tax lien.
There are events, filings and rules that extend the Statute of Limitations.
The filing of a Offer in Compromise.
The filing of an Offer in Compromise will extend the statute of limitations on collection by the time it is pending OIC plus 30 days. The IRS can take four to twelve months to work your offer and sometimes longer.
You sign a voluntary Waiver- Form 900.
If you has volunteered to extend the statute of limitations you did so on a Form 900. The date of the extension is found on the top of the waiver form. You should never be pressured to sign this Form and if asked by the IRS, consult a tax expert.
The filing of a Collection Due Process Appeal.
Timely responding to an IRS Final Notice of Intent to Levy also known as a Collection Due Process hearing ( lumped together ) will extend the time the IRS has to collect while your hearing is pending. It is extended for the time that the case was in Appeals.
Filing of any Bankruptcy.
Bankruptcy extends the statute of limitations on collection by the time you were in bankruptcy plus (6 ) six months. If you filed bankruptcy but did not eliminate all of your tax liabilities, the IRS will have more time to collect the non-discharged taxes from you. Sometimes not all taxes are discharged in the bankruptcy. Consult a tax expert.
Filing for Innocent Spouse Relief.
The collection period for the innocent spouse is suspended from the filing of the request for Innocent Spouse Relief until the 90 day period for petitioning the Tax Court expires. If a Tax Court petition is filed on an IRS denial, time is tolled until the Tax Court decision becomes final, plus 60 days.
The filing of a Taxpayer Assistance Order Form (911).
If you needing a Taxpayer Assistance Order ( TAO ) to stop the IRS in there tracks, the filing of Form 911 will suspend the statute of limitations on collection while your case is pending for review. This is a great IRS stop measure!
Installment agreements. ( defaulted Appeals )
If the IRS refuses or defaults an installment agreement, you have the right to appeal that decision. If you do, the collection time frame is extended during the Appeal.
If you are at the end of your statutory time for IRS to collect, always consult a tax professional.
If you call the IRS they have the right to reactivate your case and return it to the field for enforced collections. Tax Professionals have special telephone numbers to call that will not reactivate your case.
by steve | Feb 29, 2012 | IRS Tax Debt, Tax Help
Do not be afraid to ask the IRS to put your case into Hardship or a Currently Non Collectable Status.
As a former IRS Agent, 50% of the cases I worked, I had to write off as currently not collectible because the taxpayers simply had no money at the current time to pay the tax and for that matter, even make a small payment to the IRS. Most of these taxpayers were broke.
Since the case was in my inventory it had to be closed and put back into the system. Accounts are generally full paid, put in part pay status or placed in to a Hardship Status.
IRS does not advertise to the public that your case can be put into a current IRS hardship.
There are about 10 million cases right now in the IRS collection system that are deemed IRS tax hardships. They can stay in hardship for 1 year or stay there until the collection statute expires on the case. For more insight into how long cases stay in the closed computer system you can contact me directly.
So what is a IRS TAX HARDSHIP?
Many people have absolutely know idea that hardship or currently uncollectible exists. The truth of the matter is that most of our clients fall into the hardship rules.
Under the Internal Revenue Service IRS 5.16.1.2.9 (04-29-2011) explains the hardship provisions.
Hardship
Follow the procedures in IRM 5.15.1, Financial Analysis Handbook, to determine the correct resolution of the case based on the taxpayer’s assets and equity, income and expenses:
A hardship exists if a taxpayer is unable to pay reasonable basic living expenses.
The basis for a hardship determination is from information about the taxpayer’s financial condition provided on Form 433–A, Collection Information Statement for Wage Earners and Self-Employed Individuals or Form 433–B, Collection Information Statement for Businesses.
Generally, these cases involve no income or assets, no equity in assets or insufficient income to make any payment without causing hardship.
Generally, an account should not be reported as Currently Not Collectable if the taxpayer has income or equity in assets, and enforced collection of the income or assets would not cause hardship.
Other reasons for IRS hardships:
-
The taxpayer has a terminal illness or excessive medical bills.
-
The taxpayer is incarcerated.
-
The taxpayer’s only source of income is social security, welfare, or unemployment.
-
The taxpayer is unemployed with no source of income.
For accounts where the aggregate unpaid balance of assessments is above $10,000 the following additional verification is required:
-
Full credit report on IMF and sole proprietor taxpayers and LLCs (where an individual owner is identified as the liable taxpayer)
-
Motor vehicle records
-
Real and personal property courthouse records.
-
On-line locator services, such as Accurint, follow security guidelines when using public internet search engines
Should you think you qualify for hardship, call us today.
by steve | Feb 29, 2012 | IRS Tax Problem, Owe Payroll Taxes
IRS Trust Fund Penalty – IRS has the option NOT to ASSESS – Do not be bullied by the IRS, fight back by using the IRS IRM.
Most of the time a Revenue Officer will try to bully taxpayers and their representatives around by telling them they are going to set up the trust fund recovery penalty on a corporation in business and making there payment via a installment agreements.
The truth of the matter is, most of the Revenue Officers are not telling you the whole truth. There is a tax provision that the IRS can recommend. The service can recommend the non-assertion of the trust fund recovery penalty. You will never hear this from the local IRS. The local IRS only acts in there best interest.
Under IRS IRM 5.14.7:
http://www.irs.gov/irm/part5/irm_05-014-007.html
“In general, do not request assessment of Trust Fund Recovery Penalties if business taxpayers meet the terms of installment agreements.
If you are currently working with the IRS insist on the aforementioned manual section.
However, the trust fund recovery penalty must be considered on the potentially responsible persons of the business entity based on the following procedures.
1. If the agreement will not fully pay all balances due at least a year before the earliest Assessment Statute Expiration Date (ASED).
If this is the case the IRS Revenue Office will have to;
1. Assemble all documentation for completion of the penalty to the point of proposing assessment;
2. Complete interviews for all potentially responsible persons, and any other interviews necessary to determine responsibility and willfulness;
3. Secure 433A (Collection Information Statement) from all potentially responsible persons. Conduct financial analysis to determine whether the penalty, if assessed would be collectible;
4.Request signature of Form 2750, “Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty” from all potentially responsible officers. See IRM 5.14.7.4.1(1) through (4); and
5. If a potentially responsible officer refuses to extend the ASED, and the trust fund recovery penalty is determined collectible, complete and recommend assessment of the TFRP for that responsible person.
6. If potentially responsible persons have the ability to pay from current assets or income, request payments be made to reduce the trust fund portion of the liability. If they have the ability to make a significant payment or payments on the trust fund portion of liabilities, but do not make such payments (or do not make plans for payment from personal assets), consider recommending assessment of the TFRPs. If TFRPs are assessed on these cases, lien determinations should be made and, if appropriate, liens should be filed, and in most cases no other collection action should be taken during installment agreements.
However, if after assessing the TFRP the responsible person still does not make plans for payment from personal assets, other collection action may be taken. Before taking collection action against the responsible person, document the ICS history on why the action is being taken (since the corporate or LLC entity is in an IA) and group manager concurrence must be secured before such action commences.
Exception to the rule;
If taxpayers are currently “repeaters” , the trust fund recovery penalty normally will be assessed. (See IRM 5.14.7.2(1)(c).)
If you are currently working with the IRS insist on the aforementioned manual section.
by steve | Feb 28, 2012 | Installment Agreements, IRS Payment Plans, Tax Help
Does the IRS want a 433F from you? Do not fall into that trap! Use caution.
Use caution before giving that 433F financial statement to the Internal Revenue Service.
Most taxpayers have no clue what they are doing when sending a 433F to the IRS.
I should know. I am a former IRS agent and collections officer with the IRS. I also was a teaching instructor with the IRS.
I felt sorry for taxpayers who walked in or called the IRS on there own. It was almost stealing candy from a baby. You are walking into a trap.
Why?
IRS is a collection agency. They are not here to help the taxpayer. The taxpayer has no idea what IRS is looking for and more importantly they have no standard to judge whether the IRS Agent in the office or on the telephone is acting in the best interest of the taxpayer.
The fact of the matter is very simple, the IRS Agent is only acting in the governments best interest.
What is the 433F going to tell the IRS?
Everything!
You are giving the IRS a road map of your financial life and possible levy and seizure sources. IRS has very strict requirements on how it will work and close cases. Everything the IRS does as far as the collection division is tied into assets and the national standard expenses.
Many taxpayers believe they are in a financial hardship or a payment candidate however when the national standards are applied, the taxpayer has a wake up call. They find themselves behind the 8 ball and making a large payment to the IRS because of the 433F.
Remember, the only thing the IRS is looking at is assets and income, your liabilities are of no concern to the IRS. Your 433F Financial Statement is their road map to your pocket book. Let a tax professional give the IRS your 433F.
The National Standards and the 433F.
IRS Collection Financial Standards are intended for use in calculating repayment of delinquent taxes. These Standards are effective on March 1, 2011 for purposes of federal tax administration only. Expense information for use in bankruptcy calculations can be found on the website for the U.S. TRUSTEE program
National Standards have been established for necessary expenses: food, housekeeping supplies, apparel and services, personal care products and services, miscellaneous, housing and utilities, medical, transportation and a handful of other items. Each taxpayer must fit into the IRS national standards. If you go over the IRS standard that is your loss. IRS does have certain exceptions to this rule and a good tax representative can help you through this problem.
IRS Collection Financial Standards are intended for use in calculating repayment of delinquent taxes. These Standards are effective on March 1, 2011 for purposes of federal tax administration only. Expense information for use in bankruptcy calculations can be found on the website for the U.S. Trustee Program.
If you owe the IRS money, talk to a tax professional first. The last thing you want to do is to turn over that 433F on your own.
Also as a footnote, any IRS 433F must be fully documented and IRS will require proof of any expense recorded on the form.
Call us today and get results.
