by steve | Jan 24, 2012 | Tax Help, Uncategorized
Do you have tip income and need tax tips to help you filed your tax return.
Make sure you follow these tax tips when you are preparing your income tax return.
Call us if you need more information and we can help audit proof your tax return.
Tax Tips Regarding Tip Income
If your pay from work involves compensation through tips, then the IRS would like you to be aware of a few facts about tip income.
Here are key points to keep in mind:
1. Tips are taxable Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also considered income and subject to tax.
2. Include tips on your tax return You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
3. Report tips to your employer If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer, to record your tip income.
For more information see IRS Publication 531, Reporting Tip Income, and Publication 1244 which are available at www.irs.gov. Both can be ordered by calling 800-TAX-FORM (800-829-3676).
If you need help with income tax preparation call us today, we are former IRS Agents.
by steve | Jan 24, 2012 | Tax Help
IRS Hardship IRS Levy. we can help with your back taxes. 1-866-700-1040
Has the IRS placed on levy on your bank account or your wages? You can get your your levy released and be placed in a IRS hardship without the filing of your returns to get the levy released.
Contrary to popular belief what the IRS tells you about having all your tax returns filed before they will put you into a IRS Hardship is just not true.
Every time we call the IRS with a client that has a true IRS hardship and meets the income test and expense tests for a IRS Hardship we are ALWAYS told all tax returns must be filed.
You do not have to file all your tax returns to get the levy released, at least immediately.
We should also say that with this ruling you will find below, it does not preclude you from the filing of your tax returns.
The requirement is still there and IRS will probably give you a new date to have your tax returns filed.
There has been a recent ruling by the Taxpayer Advocates Office now setting the record straight.
Do not be bullied by the IRS.
March 29, 2011
Control No: TAS-13.1.10-0311-008
Expires: March 29, 2012
MEMORANDUM FOR TAXPAYER ADVOCATE SERVICE EMPLOYEES
s/ Nina E. Olson
FROM: Nina E. Olson
National Taxpayer Advocate
SUBJECT: Interim Guidance on Handling Collection Cases where
Economic Hardship is Present but the Taxpayer has not
Filed all Required Returns
The purpose of this memorandum is to update the guidance issued on March 23,
2010, entitled Interim Guidance on Handling Collection Cases where Economic
Hardship is Present but the Taxpayer has not Filed all Required Returns
concerning how Taxpayer Advocate Service (TAS) employees should handle
collection cases involving taxpayers with economic hardships and unfiled returns.
The Tax Court opinion, Vinatieri v. Commissioner, 133 T .C. 392 (2009)
illustrates some of the issues that can arise in this type of case. In that case, the
Tax Court held that if, during a Collection Due Process (CDP) levy hearing, the
taxpayer establishes that the proposed levy will create an economic hardship, the
IRS cannot proceed with the proposed levy action, even if the taxpayer has not
filed all returns that are due. During the CDP hearing, Ms. Vinatieri submitted
financial information to support her claim that she could not pay an outstanding
income tax liability.
The Appeals officer found that although she established
economic hardship (within the meaning of IRC § 6343(a)(1)(D)), he could not
place her account in a Currently Not Collectible (CNC) status because she had
not filed two income tax returns. Instead, the Appeals officer issued a notice of
determination sustaining the proposed levy action.
The Tax Court held that as a matter of law, the Appeals determination to proceed with a levy was wrong.
IRC
§ 6343 requires the release of a levy if the taxpayer is experiencing an economic
hardship, even if the taxpayer has not filed all returns. The court also held that
rather than proceeding with the levy, the Appeals officer should have considered
alternatives to the proposed levy action.
Note: IRC § 6343(a)(1)(D) states that a levy shall be released if “the Secretary
has determined that such levy is creating an economic hardship due to the
financial condition of the taxpayer.” Treasury Regulation § 301.6343-1(b)(4),
2
defines economic hardship:
“The levy is creating an economic hardship due to
the financial condition of an individual taxpayer. This condition applies if
satisfaction of the levy in whole or in part will cause an individual taxpayer to be
unable to pay his or her reasonable basic living expenses. The determination of a
reasonable amount for basic living expenses will be made by the director and will
vary according to the unique circumstances of the individual taxpayer. Unique
circumstances, however, do not include the maintenance of an affluent or
luxurious standard of living.”
TAS employees should advocate for the taxpayer experiencing economic
hardship when the IRS has issued a notice of levy or a Final Notice of Intent to
Levy, but the IRS will not place the account in CNC status or release a levy
because of unfiled returns.
Most TAS cases will be in the Automated Collection
System (ACS), but could also involve a Revenue Officer or Appeals (either in the
form of a Collection Appeal Program (CAP) conference or CDP hearing).
A more detailed discussion of relevant IRC sections, regulations, and IRM
references for assistance in case building and advocating for taxpayers are
included in the attachment to this memorandum.
When advocating for a taxpayer in this type of situation, attach a copy of the
Vinatieri opinion to the Operations Assistance Request (OAR) and use Special
Case code LE when making these arguments to the IRS.
If the IRS disagrees
and does not provide a compelling reason to support its disagreement,
immediately elevate the case to a manager for consideration of a taxpayer
assistance order (TAO).
Also, consider whether referral to a Revenue Officer
Technical Advisor (ROTA) may also be appropriate. However, remember that
often “time is of the essence” in these cases, and a TAO may be necessary so
the taxpayer is not further harmed.
This IGM will be incorporated into IRM 13.1.10. If you have any questions,
please contact James Book, Management and Program Analyst, TAS Technical
Analysis and Guidance at 816-291-9944
IRS Hardship – IRS Levy – All tax returns do not have to be filed – Former IRS Agent – Owe Back Taxes
by steve | Jan 24, 2012 | Back Taxes, Installment Agreements
Need to make payments to the IRS on back taxes or need a payment agreement check out the information on the 5 rule so you will not be bullied by the IRS.
We are former IRS Agents who know all the tax policies and tax programs to get you through the IRS system for back taxes.
When taxpayers are calling the IRS to make payments or asking for a installment agreement to the IRS, they are looking for some help because they can not afford to pay their tax debt at the current time. When taxpayers make this call they should be prepared to be man handled and bullied by the IRS. IRS will basically tell you, it is our way or the highway. You can now tell them, not so fast, we want the 5 year rule application.
IRS does not want to set up a payment plan, installment agreement or a payment arrangement that best fits the needs of the taxpayer.
This is when the IRS gets very selfish and wants everything their way.
Do not be bullied by the IRS. Know the Law.
IRS will require what is called the National Standard Test on all your income and expenses. IRS puts everyone in a box and expects taxpayers to met the lifestyle the IRS wants.
The bottom line, this is always unreasonable. You do not have to put up with the hard line position taken by the IRS. You can fight back by asking for a 5 year rule application to make your payment agreement or to make payments in general.
Five Year Rule: All expenses may be allowed if:
Taxpayer establishes that he or she can stay current with all paying and filing requirements.
Tax liability, including projected accruals, can be paid within five years.
Expense amounts are reasonable
Agreements will be based on a taxpayer’s maximum ability to pay, i.e., how quickly a taxpayer can fully pay the tax liability. Do not automatically allow agreements based on the five-year maximum if expenses are unreasonable.
Reminder:
The Five Year Rule is not applicable to corporations, partnerships, LLCs where the LLC is identified as the liable taxpayer, or any BMF expenses.
Need to make payments to the IRS, need a payment plan or installment agreement, call us today.
by steve | Jan 24, 2012 | IRS Tax Audit, Representation, Tax Help
Victim of Tax Scam – IRS Tax Audit – Get IRS Penalties Removed – IOD
There are hundreds of IRS Tax Scams.
So many taxpayers have been ripped off and now being audited by the IRS and now owe a large tax debt to the IRS. There is a way to help fight the IRS during the tax audit and there is a possibility of getting penalties and interest abated or removed.There is also tax help to get your tax case settled.
We are comprised of Board Certified Tax Attorneys, CPA’s and Former IRS Agents and Managers. We can help you today!
Tax Scam Problems:
Have you been a victim of a tax scam?
Is the IRS auditing your tax return?
Need to get Penalties removed?
Need to settle with the IRS ?
Owe IRS Back Taxes?
If you have been a victim of one of the many tax scams call us today to hear all your options to reduce or settle your tax debt. There are so many tax scams and so many new tax scams popping up everyday. Many helpless victims are being taken in by these scammers claiming that what they are going is legal.Taxpayers believe them because they have offices, what appear to be licenses and because they are good con persons.
Many taxpayers walk in to there near by tax preparer and are convinced that there are new tax programs out to help the American taxpayer and that these programs should be taken advantage of. These tax preparers show them articles and make up information that look very real. These fraudsters convince or sell them into these so called tax programs. One or two years later these innocent victims find out they have been a victim of a tax scam and find themselves on the end of a tax audit and now owing large sums to IRS and the money they receive is spent and is long gone.
These scammers are good and the public has no way to tell whether they are telling the truth because IRS does not have a list a national tax preparers.
The Internal Revenue Service data entry clerks do not verify the information that is input within the Computer system. Once the information is input, barring any upfront computer alerts upon an Individual’s Master File, the system itself runs an automatic accounting audit which may produce a refund.
Be assured at some point if a refund is produced, the Agency will audit the collection of information data trail that produced the refund.
This is why these 1099 OID “success stories” are short lived rewards, which quickly turn into a never ending nightmare.
One example of how this works are the promoters of this OID fraud who touted those who received the refunds, but failed to acknowledge, nor comprehend how the agency does not challenge the issuance of collections of information.
Many Tax Scams
There are so many tax scams it is hard to keep up with. One of the more popular ones are the OID, phony tax arguments, tax identity theft, frivolous arguments, preparer abusive and false tax credits.
Here is a short list of some of the latest tax scams:
Filing False or Misleading Forms – OID
The IRS is seeing various instances where scam artists file false or misleading returns to claim refunds that they are not entitled to. Under the scheme, taxpayers fabricate an information return and falsely claim the corresponding amount as withholding as a way to seek a tax refund. Phony information returns, such as a Form 1099 Original Issue Discount (OID), claiming false withholding credits usually are used to legitimize erroneous refund claims. One version of the scheme is based on a false theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing 1099-OID forms to their creditors, including the IRS.
Hiding Income Offshore
The IRS aggressively pursues taxpayers involved in abusive offshore transactions as well as the promoters, professionals and others who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks, brokerage accounts or through the use of nominee entities. Taxpayers also evade taxes by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or insurance plans.
In early February, the IRS announced a special voluntary disclosure initiative designed to bring offshore money back into the U.S. tax system and help people with undisclosed income from hidden offshore accounts get current with their taxes. The new voluntary disclosure initiative will be available through Aug. 31, 2011. The IRS decision to open a second special disclosure initiative follows continuing interest from taxpayers with foreign accounts. In response to numerous requests, information about this initiative is available on IRS.gov in eight different languages, including: Chinese, Farsi, German, Hindi, Korean, Russian, Spanish, and Vietnamese.
Identity Theft and Phishing
Identity theft occurs when someone uses an unsuspecting individual’s name, Social Security number, credit card number or other personal information without permission to commit fraud or other crimes. For example, a criminal can use someone else’s information to run up bills on that person’s credit card, empty that person’s bank account or take out a loan in that person’s name. And when it comes to taxes, a criminal with someone else’s personal information can file a fraudulent tax return and collect a refund.
Phishing is one tactic used by scam artists to trick unsuspecting victims into revealing personal or financial information online. Phishing involves the use of phony e-mail or websites — even social media. A scammer may pose as an institution such as the IRS. IRS impersonation schemes flourish during tax season. Spyware, which can be loaded onto an unsuspecting taxpayer’s computer by opening an e-mail attachment or clicking on a link, is another tool identity thieves use to steal personal information.
Identity theft is a major problem that affects many people each year. That’s why it’s important that taxpayers protect their personal information. Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. A suspicious e-mail or an “IRS” Web address that does not begin with http://www.irs.gov should be forwarded to the IRS at phishing@irs.gov.
Return Preparer Fraud
While most return preparers are professionals who provide honest and excellent service to their clients, some make basic errors or engage in fraud and other illegal activities.
Dishonest return preparers can cause big trouble for taxpayers who fall victim to their ploys. These fraudsters derive benefit by skimming a portion of their clients’ refunds, charging inflated fees for return preparation services and attracting new clients by making false promises. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against dozens of others.
To increase confidence in the tax system and improve compliance with the tax law, the IRS is implementing a number of requirements for paid tax preparers, including registration with the IRS and a preparer tax identification number (PTIN), as well as competency tests and ongoing continuing professional education.
The new regulations require paid tax preparers (including attorneys, CPAs, and enrolled agents) to apply for a Preparer Tax Identification Number (PTIN) before preparing any federal tax returns in 2011.
Higher standards for the tax preparer community will result in greater compliance with tax laws, increase confidence in the tax system and ultimately lead to a better experience for taxpayers.
Filing False or Misleading Forms
IRS personnel are seeing various instances in which scam artists file false or misleading returns to claim refunds to which they are not entitled. In one variation of this scheme, a taxpayer seeks a refund by fabricating an information return and falsely claiming the corresponding amount as withholding. Phony information returns, such as a Form 1099 Original Issue Discount (OID), which claims false withholding credits, are usually used to legitimize erroneous refund claims. One version of the scheme is based on the bogus theory that the federal government maintains secret accounts for its citizens and that taxpayers can gain access to funds in those accounts by issuing 1099-OID forms to their creditors, including the IRS.
The IRS continues to see instances in which people file false or fraudulent tax returns to try to obtain improper tax refunds. The IRS takes refund fraud seriously, has programs to aggressively combat it and stops the vast majority of incorrect refunds.
Because scammers often use information from family or friends in filing false or fraudulent returns, beware of requests for such data. Don’t fall prey to people who encourage you to claim deductions or credits you are not entitled to or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.
Frivolous Arguments
Promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. The IRS has a list of frivolous legal positions that taxpayers should avoid. These arguments are false and have been thrown out of court. While taxpayers have the right to contest their tax liabilities in court, no one has the right to disobey the law or IRS guidance.
Nontaxable Social Security Benefits with Exaggerated Withholding Credit
The IRS has identified returns where taxpayers report nontaxable Social Security Benefits with excessive withholding. This tactic results in no income reported to the IRS on the tax return. Often both the withholding amount and the reported income are incorrect. Taxpayers should avoid making these mistakes. Filings of this type of return may result in a $5,000 penalty.
Abuse of Charitable Organizations and Deductions
The IRS continues to observe the misuse of tax-exempt organizations. Abuse includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property. The IRS also continues to investigate various schemes involving the donation of non-cash assets including situations where several organizations claim the full value for both the receipt and distribution of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new definitions of qualified appraisals and qualified appraisers for taxpayers claiming charitable contributions.
Abusive Retirement Plans
The IRS continues to find abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers use to avoid the limits on contributions to IRAs, as well as transactions that are not properly reported as early distributions. Taxpayers should be wary of advisers who encourage them to shift appreciated assets at less than fair market value into IRAs or companies owned by their IRAs to circumvent annual contribution limits. Other variations have included the use of limited liability companies to engage in activity that is considered prohibited.
Disguised Corporate Ownership
Corporations and other entities are formed and operated in certain states for the purpose of disguising the ownership of the business or financial activity by means such as improperly using a third party to request an employer identification number.
Such entities can be used to facilitate underreporting of income, fictitious deductions, non-filing of tax returns, participating in listed transactions, money laundering, financial crimes and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance with the law.
Zero Wages
Filing a phony wage-or-income-related informational return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer may also submit a statement rebutting wages and taxes reported by a payer to the IRS.
Sometimes, fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme. Filings of this type of return may result in a $5,000 penalty.
Misuse of Trusts
For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. While there are many legitimate, valid uses of trusts in tax and estate planning, some highly questionable transactions promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. Such trusts rarely deliver the tax benefits promised and are used primarily as a means to avoid income tax liability and hide assets from creditors, including the IRS.
IRS personnel have recently seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering a trust arrangement.
If you are a victim of a tax scam, have been audited by the IRS or looking to get penalties and interest removed or abatement call us today.
by steve | Jan 24, 2012 | Tax Help, Tax Settlements
Get rid of IRS Penalties and Interest, get them permanently removed by former IRS Agents, Managers and Appeals Agents.
The odds of a taxpayer getting their own penalty and interest abated is about 9%.
The odds of a tax professional getting the penalties and interested abated, removed or discharged is 80%.
So who should represent your claim for abatement of penalties and interest?
Most taxpayers have no clue on how to get IRS Penalties and Interest abated. I should know. I have worked for the IRS for over 10 years and my job allow me to abate, get rid of and remove IRS Penalties and Interest.
I actually felt very sorry for the taxpayers and while I was there I would call them on the phone and tell them to change their claim and let them know how to get penalties and interest remove and abated.
IRS has very specific requirements to get rid of these IRS Penalties.
There is no magic wand to get rid of them. A claim must be carefully drafted and prepared before it goes into the IRS. It must have all supporting documentation and exhibits proof to verify the claim.
You should also know that the IRS usually rejects these claims of abatement’s because these claims do not contain all the elements needed and necessary for the IRS.
Here is a guide for you on how the process works:
Reasons for abatement of penalties and interest that the IRS tends to allow:
1. Ignorance of the Law Mistake was Made
2. Forgetfulness
3. Death,
4. Serious Illness,
5. Unavoidable Absence
6. Unable to Obtain Records
7. Undue Hardship or Ordinary Business Care and Prudence
8. Advice from third parties
9. Written Advice from the IRS
10. Oral Advice from IRS
11. Advice from a Tax Advisor
12. Fire, Casualty, Natural Disaster, or Other Disturbance
13. Official Disaster Area
Each Penalty and Interest claim for abatement had to have certain elements that would fit the criteria or profile that the IRS needed to process the request. These are the driving elements that would propel the acceptance. The elements needed to process the claim were and not limited to the following:
1. what had to present in the claim for Abatement of Penalties and Interest– genuine and believable documented facts
2. a complete history of the event
3. what happened and when did it happen
4. during that period of time, why was the compliance not met
5. what facts and circumstance prevented the non-compliance
6. who else can verify the facts of this case
7. what documentation do you have to prove this
8. does your timeline meet the time line of the penalties and interest
The Hazards of Litigation play an important role:
The Appeals Division has the authority to resolve the penalty abatement issue based on “hazards of litigation.” “Hazards of litigation” is an intermediate resolution of an issue based upon the fact that there is substantial uncertainty in the event of litigation as how the courts would interpret and apply the tax law or as to what facts the courts would find. Generally, this means that Appeals will settle an issue for a reduced amount, on a basis less than a 100% concession.
This means for example that in a case of an appeal of a rejected abatement of a failure to file penalty in the amount of $8,000.00; the Appeals Division would agree to abate $5,000.00 based on its interpretation of the tax law and facts. You would have to have a complete knowledge of the tax law and court cases on the applicable penalty to argue “hazards of litigation” with the Appeals Officer which most taxpayers do not possess.
Our former IRS Appeal Agents writes:
In my 35 years of employment with the Appeals Division as an Appeals Officer, I had many penalty abatement cases assigned to me. I resolved many of them based on “hazards of litigation.” I also sustained the rejection of penalty abatement requests.
It all came down to facts and circumstances and how well the taxpayer or representative advocated the penalty abatement request. The representatives who understood the applicable tax law and the limits that the Appeals Officer could take to recommend the abatement of a penalty were able to negotiate the best settlements for their clients. Just because the representative was not able to get the penalty fully abated does not mean that he failed in his mission; it means that the Government had a good case for the application of the penalty and the representative was able to expose a “litigation hazard” that the Appeals Officer considered.
If you need to get your IRS Penalties and Interest abated or removed call us today! We can settle your Penalties and Interest
