by Fresh Start Tax | Feb 21, 2018 | Tax Help
Whats new with IRS? Bitcoin Audits???
We’re the Affordable professional tax firm that are specialists and Experts in IRS tax Audits, Bitcoin and Bitcoin appeals.
We have 205 years of direct tax experience, 95 years of working for the IRS in the local, district and regional offices.
Being former IRS agent managers and supervisors in the Audit division gives us a unique advantage & can change the result of an IRS tax Audit.
We worked as Agents, Instructors and in Management. We know the Audit settlement techniques and formulas to save your money.
Be worry free, call us today.
It only makes sense to have Former IRS Agents and IRS Tax Audit Managers handle your IRS tax Audit and give you the most experienced and successful IRS Tax Audit help.
IRS Audits less that 1% of all taxpayers nationwide.
For a Bitcoin tax Audit call us for representation.
by Fresh Start Tax | Feb 21, 2018 | Tax Help
Whats new with IRS? Bitcoin Audits???
We’re the Affordable professional tax firm that are specialists and Experts in IRS tax Audits, Bitcoin and Bitcoin appeals.
We have 205 years of direct tax experience, 95 years of working for the IRS in the local, district and regional offices.
Being former IRS agent managers and supervisors in the Audit division gives us a unique advantage & can change the result of an IRS tax Audit.
We worked as Agents, Instructors and in Management. We know the Audit settlement techniques and formulas to save your money.
Be worry free, call us today.
It only makes sense to have Former IRS Agents and IRS Tax Audit Managers handle your IRS tax Audit and give you the most experienced and successful IRS Tax Audit help.
IRS Audits less that 1% of all taxpayers nationwide.
This is an information piece on the this blog post
For a Bitcoin tax Audit by the IRS, call us for representation.
help information about bitcoin
Q–1: How is virtual currency treated for federal tax purposes?
A–1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transaction apply to transaction using virtual currency.
Q–2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?
A–2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.
Q–3: Must a taxpayer who receives virtual currency as payment for goods or services include in computing gross income the fair market value of the virtual currency?
A–3: Yes. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received.
Q–4: What is the basis of virtual currency received as payment for goods or services in Q&A–3?
A–4: The basis of virtual currency that a taxpayer receives as payment for goods or services in Q&A–3 is the fair market value of the virtual currency in U.S. dollars as of the date of receipt. See Publication 551, Basis of Assets, for more information on the computation of basis when property is received for goods or services.
Q–5: How is the fair market value of virtual currency determined?
A–5: For U.S. tax purposes, transaction using virtual currency must be reported in U.S. dollars. Therefore, taxpayers will be required to determine the fair market value of virtual currency in U.S. dollars as of the date of payment or receipt.
If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.
Q–6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?
A–6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain.
The taxpayer has a loss if the fair market value of the property received is less that the adjusted basis of the virtual currency.
Q–7: What type of gain or loss does a taxpayer realize on the sale or exchange of virtual currency?
A–7: The character of the gain or loss generally depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
A taxpayer generally realizes capital gain or loss on the sale or exchange of virtual currency that is a capital asset in the hands of the taxpayer. For example, stocks, bonds, and other investment property are generally capital assets.
A taxpayer generally realizes ordinary gain or loss on the sale or exchange of virtual currency that is not a capital asset in the hands of the taxpayer. Inventory and other property held mainly for sale to cus timers in a trade or business are examples of property that is not a capital asset.
Q–8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transaction and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities?
A–8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includable in gross income.
See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.
Q–9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities?
A–9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute self-employment income and are subject to the self-employment tax.
Q–10: Does virtual currency received by an independent contractor for performing services constitute self-employment income?
A–10: Yes. Generally, self-employment income includes all gross income derived by an individual from any trade or business carried on by the individual as other that an employee. Consequently, the fair market value of virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self-employment income and is subject to the self-employment tax.
Q–11: Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes?
A–11: Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes. Consequently, the fair market value of virtual currency paid as wages is subject to federal income tax withholding, Federal Insurance Contributions Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W–2, Wage and Tax Statement.
Q–12: Is a payment made using virtual currency subject to information reporting?
A–12: A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
For example, a person who in the course of a trade or business makes a payment of fixed and determinable income using virtual currency with a value of $600 or more to a U.S. non-exempt recipient in a taxable year is required to report the payment to the IRS and to the payee. miums, annuities, and compensation.
Q–13: Is a person who in the course of a trade or business makes a payment using virtual currency worth $600 or more to an independent contractor for performing services required to file an information return with the IRS?
A–13: Generally, a person who in the course of a trade or business makes a payment of $600 or more in a taxable year to an independent contractor for the performance of services is required to report that payment to the IRS and to the payee on Form 1099–MISC, Miscellaneous Income.
Payments of virtual currency required to be reported on Form 1099-MISC should be reported using the fair market value of the virtual currency in U.S. dollars as of the date of payment.
The payment recipient may have income even if the recipient does not receive a Form 1099–MISC. See the Instructions to Form 1099–MISC and the General Instructions for Certain Information Returns for more information.
Q–14: Are payments made using virtual currency subject to backup withholding?
A–14: Payments made using virtual currency are subject to backup withholding to the same extent as other payments made in property.
Therefore, payor’s making reportable payments using virtual currency must solicit a taxpayer identification number (TIN) from the payee.
The payor must backup withhold from the payment if a TIN is not obtain prior to payment or if the payor receives notification from the IRS that backup withholding is required. See Publication 1281, Backup Withholding for Missing and Incorrect Name/TINs, for more information.
Q–15: Are there IRS information reporting requirements for a person who settles payments made in virtual currency on behalf of merchants that accept virtual currency from their cus timers?
A–15: Yes, if certain requirements are met. In general, a third party that contracts with a substantial number of unrelated merchants to settle payments between the merchants and their cus timers is a third party settlement organization (TPSO).
A TPSO is required to report payments made to a merchant on a Form 1099-K, Payment Card and Third Party Network transaction , if, for the calendar year, both
(1) the number of transaction settled for the merchant exceeds 200, and
(2) the gross amount of payments made to the merchant exceeds $20,000. When completing Boxes 1, 3, and 5a–1 on the Form 1099-K, transaction where the TPSO settles payments made with virtual currency are aggregated with transaction where the TPSO settles payments made with real currency to determine the total amounts to be reported in those boxes.
When determining whether the transaction are reportable, the value of the virtual currency is the fair market value of the virtual currency in U.S. dollars on the date of payment.
Q–16: Will taxpayers be subject to penalties for having treated a virtual currency transaction in a manner that is inconsistent with this notice prior to March 25, 2014?
A–16: Taxpayers may be subject to penalties for failure to comply with tax laws. For example, underpayments attributable to virtual currency transaction may be subject to penalties, such as accuracy-related penalties under section 6662.
In addition, failure to timely or correctly report virtual currency transaction when required to do so may be subject to information reporting penalties under section 6721 and 6722.
However, penalty relief may be available to taxpayers and persons required to file an information return who are able to establish that the underpayment or failure to properly file information returns is due to reasonable cause.
by Fresh Start Tax | Feb 12, 2018 | Tax Help
As former IRS agents and managers, we can help you find different examinations to settle your back tax debt with the Internal Revenue Service. Call us first, 1-866-700-1040
As a former IRS agent and teaching instructors I worked the offer in compromise program & instructors ed new agents how to accept or decline offers in compromise.
I am a true expert in the field on how to settle IRS back tax debt.
The offer in compromise is a tricky document that requires excellent documentation, good timing and skill to know whether an offer in compromise should be filed at all.
There are different ways to settle IRS tax debt and the following article will go ahead and allow you to see the different ways.
The offer in compromise stands alone because of the technical aspect of the acceptance of the offer.
The offer in compromise has a pre-qualifier tool and each individual should use the pre-qualifier tool themselves or contact a true tax professional who can help them to determine the best case scenario with the lowest possible settlement .
Each taxpayer is different with a different set of facts and circumstances and there is no blanket answer on how much you should offer IRS.
There’s certain formulas that apply in one must know the formulas also, some planning that may help you push the offer through for the lowest possible dollar.
OTHER OPTIONS
Here are generally three examinations, payment agreements, current hardship statuses, and settlement s.
Some people may want to look at the statue of limitations on their cases but we can go over every option and bring a quick resolution and remedied your case. For other, a bankruptcy may apply.
The Internal Revenue Service generally has a 10 year statute of limitations on all IRS collection cases. You can contact us to find out what the exceptions are.
WE KNOW ALL THE OPTIONS. LET OUR FORMER IRS EXPERIENCE BE YOUR BEST FRIEND!!!!!
We have money back guarantees and are Experts for the very best settlement s and examinations.
We have over 100 years of direct working experience with the IRS. We know every possible solution and can provide every possible remedy to get you the best result possible.
We worked as former IRS agents, managers, and tax supervisors in the local IRS offices.
Let our years of experience be your best friend to get you the results that you need.
You will never speak to the Internal Revenue Service.
The first step to lower stress and lower debt is to contact former IRS agents who know the system.
If you owe $15,000 or more in taxes, or you have on Unfiled tax returns, you need to hear about the IRS programs available to you.
6.5 million Americans are falling in tax debt every year and the other countless million who have not filed their yearly tax returns.
If you are one of them, you understand about the stress and frustration of having to deal with the IRS.
The IRS can hold on to your refund, take a chunk of your pay, put a federal tax levy or garnishment on your bank account, seize and sell your property and revoke your passport.
IRS also can take 15% of your Social Security check, a benefit that’s off-limits to private creditors.
The Internal Revenue Service is the largest and most vicious tax collection agency in the world. But you do not have to worry about them we how to control the beast because of our years of experience.
If you know the system you will found the IRS actually working with you not against you.
There are tax relief programs available.
A simple call the to our office and speak directly to a tax professional can assure you that this process is not as nearly as complicated as you think.
Why does the Internal Revenue Service want to settle your tax debt for pennies on the dollar?
1.IRS resources are very constrained.
Five years of budget cuts by Congress has limited the IRS’ ability to enforce its own laws.
The IRS budget has been reduced by $1.2 billion since 2010 despite having 12.8 million more tax returns to process.
Since 2010, the IRS has laid off 17,000 workers, which explains why, in 2015, the IRS only Audited 0.7% of all tax returns.
Actually, we have a former IRS agent who recently retired and can go through a litany of other reasons why IRS would settle your tax debt.
Just know this is in the best interest of the government to do so.
Congress looks at IRS numbers at the end of every year and many times budgets of the Treasury department based on the collection statistics from the Internal Revenue Service.
2. You may have heard that the IRS only has 10 years to collect taxes.
These time restrictions put a lot of pressure on already overworked IRS agents.
Also it is called return on investment. The IRS wants to collect something on a debt that they may never be able to collect.
You will get you the best deal possible whether it’s our firm or another firm always go with former IRS agents.
IRS tax relief programs help taxpayers by reducing the amount they owe, giving them more time to pay, or a combination of both. It’s a win-win for the IRS and taxpayers.
What type of IRS tax Debt relief examinations are there?
There are several tax relief programs taxpayers can apply for, but only three that offer debt forgiveness:
1. The Offer in Compromise program,
2. The Partial Pay installment Agreement program,
3. The Currently non-collectible, hardship.
Your current financial statement on form 433A or 433F will determine how IRS will closer settle your case. Caution must be taken giving IRS a financial statement. Must sure a tax professional reviews first.
The Offer in Compromise Program, IRS TAX DEBT SETTLEMENT
AIRS offer in compromise is a settlement where the IRS accepts less that the total debt amount in exchange for a lump sum or up to two years of monthly payments.
As far as debt forgiveness goes, offers in compromise are usually the best deal available to taxpayers.
The problem is it’s not easy to meet IRS eligibility criteria. There is also a pre-qualifier program to make sure you are eligible for settlement .
I was a former IRS agent who taught the offer in compromise program to new agents. I am one of the nation’s leading Experts in the offer in compromise.
However, since 2010, the IRS has relaxed its standards through the fresh start initiative.
In 2015, the IRS accepted 40.3% of all offers in compromise for an average settlement of $9000 a case.
The acceptance rate is even higher for taxpayers who hire a tax relief company. It’s common for tax relief firms to maintain acceptance rates of over 85%.
Partial Pay or smoothly payments installment Agreement
The Partial Pay installment Agreement does not get much attention and publicity, but it often has even better terms that offers in compromise.
40% of all open IRS cases are issue in payment agreement status but sadly over 50% of taxpayers cannot keep up their payments.
A Partial Pay installment Agreement is similar to an Offer in Compromise in that the IRS forgives part of your debt, but it has longer repayment terms: typically, 36 to 72 months.
Partial Pay installment Agreements are easier and faster to qualify for and you don’t have to provide as much financial information.
However if your debt is over $50,000 IRS will require a complete documented financial statements.
The Hardship Program, Currently Non collectible. 40% of open collection cases are put in this classification.
The hardship program simply means you do not have the currently the means to deal with Internal Revenue Service.
After the Internal Revenue Service reviews your current financial statement and based on the national, local, and geographical standards, IRS will find that you are upside down in issue you in a currently non-collectible status.
What that means is that IRS puts a freeze on your case for two or three years and will look at the situation later.
Many times a taxpayer stays in this uncollectible status for several years and at some point in time the statute of limitation may run out, contact us for more details.
Do you have Unfiled tax returns? Very Important issue with the IRS
You Must have all tax return filed and update to date on the IRS Cade 2 computer system.
The IRS Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less that the full amount owed. Taxpayers who can fully pay the liabilities through an installment agreement or other means, generally won’t qualify for an OIC in most cases. shift
To qualify for an OIC, the taxpayer must have filed all tax returns, made all required estimated tax payments for the current year, and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.
In most cases, the IRS won’t accept an OIC unless the amount offered by a taxpayer is equal to or greater that the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay.
The RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income less certain amounts allowed for basic living expenses.
Reasons for the Offer
The IRS may accept an OIC based on three grounds:
• First, the IRS can accept a compromise if there’s doubt as to liability. A compromise meets this only when there’s a genuine dispute as to the existence or amount of the correct tax debt under the law.
• Second, the IRS can accept a compromise if there’s doubt that the amount owed is fully collectible. Doubt as to collectivity exists in any case where the taxpayer’s assets and income are less that the full amount of the tax liability.
• Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there’s no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
IRS Forms to Use
When submitting an OIC based on doubt as to collectivity or effective tax administration, taxpayers must use the most current version of Form 656, Offer in Compromise, and also submit Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses.
A taxpayer submitting an OIC based on doubt as to liability must file a Form 656-L.pdf, Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A (OIC) and/or Form 433-B (OIC). Form 656 and referenced collection information statements are available in the Offer in Compromise Booklet, Form 656-B.pdf.
Application Fee
In general, a taxpayer must submit an application fee for the amount stated on Form 656. Don’t combine this fee with any other tax payments.
However, there are two exceptions to this requirement:
• First, no application fee is required if the OIC is based on doubt as to liability.
• Second, the fee isn’t required if the taxpayer is an individual (not a corporation, partnership, or other entity) who qualifies for the low-income exception. This exception applies if the taxpayer’s total monthly income falls at or below 250 percent of the poverty guidelines published by the department of Health and Human Services. Section 1 of Form 656 contains the Low Income Certification guidelines to assist taxpayers in determining whether they qualify for the low-income exception.
A taxpayer who claims the low-income exception must complete section 1 of Form 656 and check the certification box.
Payment Options Types
Lump Sum Cash Offer –
Taxpayers may choose to pay the offer amount in a lump sum or in installment payments. A “lump sum cash offer” is defined as an offer payable in 5 or fewer installments within 5 or fewer months after the offer is accepted. If a taxpayer submits a lump sum cash offer, the taxpayer must include with the Form 656 a nonrefundable payment equal to 20 percent of the offer amount.
This payment is required in addition to the application fee. The 20 percent payment is generally nonrefundable, meaning it won’t be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance.
Instead, the 20 percent payment will be applied to the taxpayer’s tax liability. The taxpayer has a right to specify the particular tax liability to which the IRS will apply the 20 percent payment.
Periodic Payment Offer –
An offer is called a “periodic payment offer” under the tax law if it’s payable in 6 or more monthly installments and within 24 months after the offer is accepted. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with the Form 656.
This payment is required in addition to the application fee. This amount is generally nonrefundable, just like the 20 percent payment required for a lump sum cash offer. Also, while the IRS is evaluating a periodic payment offer, the taxpayer must continue to make the installment payments provided for under the terms of the offer.
These amounts are also nonrefundable. These amounts are applied to the tax liabilities and the taxpayer has a right to specify the particular tax liabilities to which the periodic payments will be applied.
Upon acceptance of an OIC, the taxpayer may no longer designate offer payments to any tax liability specifically covered in the offer agreement.
Suspension of Collection
Ordinarily, the statutory time within which the IRS may engage in collection activities is suspended during the period that the OIC is under consideration, and is further suspended if the OIC is rejected by the IRS and where the taxpayer appeals the rejection to the IRS Office of Appeals within 30 days from the date of the notice of rejection.
Offer Terms
If the IRS accepts the taxpayer’s offer, the IRS expects that the taxpayer will have no further delinquencies and will fully comply with the tax laws. If the taxpayer doesn’t abide by all the terms and conditions of the OIC, the IRS may determine that the OIC is in default.
For doubt as to collectivity and effective tax administration OICs, the terms and conditions include a requirement that the taxpayer timely file all tax returns and timely pay all taxes for 5 years from the date of acceptance of the OIC.
When an OIC is declared to be in default, the agreement is no longer in effect and the IRS may then collect the amounts originally owed (less payments made), plus interest and penalties. Additionally, any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
Right to Appeal
If the IRS rejects an OIC, the taxpayer will be notified by mail. The letter will explain the reason that the IRS rejected the offer and will provide detailed instructors on how the taxpayer may appeal the decision to the IRS Office of Appeals.
The appeal must be made within 30 days from the date of the letter.
Return of an Offer
In some cases, an OIC is returned to the taxpayer rather that rejected, because the taxpayer didn’t submit necessary information, filed for bankruptcy, failed to include a required application fee or nonrefundable payment with the offer, hasn’t filed required tax returns, or hasn’t paid current tax liabilities at the time the IRS is considering the offer. A returned offer is different from a rejection because there’s no right to appeal when the IRS returns the offer.
However, once current, the offer may be submitted again.
*Note: OIC application received on or after March 27, 2017, are now returned without consideration if taxpayers haven’t filed all required tax returns.
The application fee is returned and any required initial payment submitted with the OIC is applied to outstand ing tax debt.
This policy doesn’t apply to current year tax returns if there is a valid extension on file.
by Fresh Start Tax | Feb 12, 2018 | Tax Help
As former IRS agents and managers, we can help you find different examinations to settle your back tax debt with the Internal Revenue Service. Call us first, 1-866-700-1040
As a former IRS agent and teaching instructors I worked the offer in compromise program & instructed new agents how to accept or decline offers in compromise.
I am a true expert in the field on how to settle IRS back tax debt.
The offer in compromise is a tricky document that requires excellent documentation, good timing and skill to know whether an offer in compromise should be filed at all.
There are different ways to settle IRS tax debt and the following article will go ahead and allow you to see the different ways.
The offer in compromise stands alone because of the technical aspect of the acceptance of the offer.
The offer in compromise has a pre-qualifier tool and each individual should use the pre-qualifier tool themselves or contact a true tax professional who can help them to determine the best case scenario with the lowest possible settlement .
Each taxpayer is different with a different set of facts and circumstances and there is no blanket answer on how much you should offer IRS.
There’s certain formulas that apply in one must know the formulas also, some planning that may help you push the offer through for the lowest possible dollar.
OTHER OPTIONS
Here are generally three examinations, payment agreements, current hardship statuses, and settlement s.
Some people may want to look at the statue of limitations on their cases but we can go over every option and bring a quick resolution and remedied your case. For other, a bankruptcy may apply.
The Internal Revenue Service generally has a 10 year statute of limitations on all IRS collection cases. You can contact us to find out what the exceptions are.
WE KNOW ALL THE OPTIONS. LET OUR FORMER IRS EXPERIENCE BE YOUR BEST FRIEND!!!!!
We have money back guarantees and are Experts for the very best settlement s and examinations.
We have over 100 years of direct working experience with the IRS. We know every possible solution and can provide every possible remedy to get you the best result possible.
We worked as former IRS agents, managers, and tax supervisors in the local IRS offices.
Let our years of experience be your best friend to get you the results that you need.
You will never speak to the Internal Revenue Service.
The first step to lower stress and lower debt is to contact former IRS agents who know the system.
If you owe $15,000 or more in taxes, or you have on Unfiled tax returns, you need to hear about the IRS programs available to you.
6.5 million Americans are falling in tax debt every year and the other countless million who have not filed their yearly tax returns.
If you are one of them, you understand about the stress and frustration of having to deal with the IRS.
The IRS can hold on to your refund, take a chunk of your pay, put a federal tax levy or garnishment on your bank account, seize and sell your property and revoke your passport.
IRS also can take 15% of your Social Security check, a benefit that’s off-limits to private creditors.
The Internal Revenue Service is the largest and most vicious tax collection agency in the world. But you do not have to worry about them we how to control the beast because of our years of experience.
If you know the system you will found the IRS actually working with you not against you.
There are tax relief programs available.
A simple call the to our office and speak directly to a tax professional can assure you that this process is not as nearly as complicated as you think.
Why does the Internal Revenue Service want to settle your tax debt for pennies on the dollar?
1.IRS resources are very constrained.
Five years of budget cuts by Congress has limited the IRS’ ability to enforce its own laws.
The IRS budget has been reduced by $1.2 billion since 2010 despite having 12.8 million more tax returns to process.
Since 2010, the IRS has laid off 17,000 workers, which explains why, in 2015, the IRS only Audited 0.7% of all tax returns.
Actually, we have a former IRS agent who recently retired and can go through a litany of other reasons why IRS would settle your tax debt.
Just know this is in the best interest of the government to do so.
Congress looks at IRS numbers at the end of every year and many times budgets of the Treasury department based on the collection statistics from the Internal Revenue Service.
2. You may have heard that the IRS only has 10 years to collect taxes.
These time restrictions put a lot of pressure on already overworked IRS agents.
Also it is called return on investment. The IRS wants to collect something on a debt that they may never be able to collect.
You will get you the best deal possible whether it’s our firm or another firm always go with former IRS agents.
IRS tax relief programs help taxpayers by reducing the amount they owe, giving them more time to pay, or a combination of both. It’s a win-win for the IRS and taxpayers.
What type of IRS tax Debt relief examinations are there?
There are several tax relief programs taxpayers can apply for, but only three that offer debt forgiveness:
1. The Offer in Compromise program,
2. The Partial Pay installment Agreement program,
3. The Currently non-collectible, hardship.
Your current financial statement on form 433A or 433F will determine how IRS will closer settle your case. Caution must be taken giving IRS a financial statement. Must sure a tax professional reviews first.
The Offer in Compromise Program, IRS TAX DEBT SETTLEMENT
AIRS offer in compromise is a settlement where the IRS accepts less that the total debt amount in exchange for a lump sum or up to two years of monthly payments.
As far as debt forgiveness goes, offers in compromise are usually the best deal available to taxpayers.
The problem is it’s not easy to meet IRS eligibility criteria. There is also a pre-qualifier program to make sure you are eligible for settlement .
I was a former IRS agent who taught the offer in compromise program to new agents. I am one of the nation’s leading Experts in the offer in compromise.
However, since 2010, the IRS has relaxed its standards through the fresh start initiative.
In 2015, the IRS accepted 40.3% of all offers in compromise for an average settlement of $9000 a case.
The acceptance rate is even higher for taxpayers who hire a tax relief company. It’s common for tax relief firms to maintain acceptance rates of over 85%.
Partial Pay or smoothly payments installment Agreement
The Partial Pay installment Agreement does not get much attention and publicity, but it often has even better terms that offers in compromise.
40% of all open IRS cases are an issue in payment agreement status but sadly over 50% of taxpayers cannot keep up their payments.
A Partial Pay installment Agreement is similar to an Offer in Compromise in that the IRS forgives part of your debt, but it has longer repayment terms: typically, 36 to 72 months.
Partial Pay installment Agreements are easier and faster to qualify for and you don’t have to provide as much financial information.
However if your debt is over $50,000 IRS will require a complete documented financial statements.
The Hardship Program, Currently Non collectible. 40% of open collection cases are put in this classification.
The hardship program simply means you do not have the currently the means to deal with Internal Revenue Service.
After the Internal Revenue Service reviews your current financial statement and based on the national, local, and geographical standards, IRS will find that you are upside down in issue you in a currently non-collectible status.
What that means is that IRS puts a freeze on your case for two or three years and will look at the situation later.
Many times a taxpayer stays in this uncollectible status for several years and at some point in time the statute of limitation may run out, contact us for more details.
Do you have Unfiled tax returns? Very Important issue with the IRS
You Must have all tax return filed and update to date on the IRS Cade 2 computer system.
The IRS Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less that the full amount owed. Taxpayers who can fully pay the liabilities through an installment agreement or other means, generally won’t qualify for an OIC in most cases. shift
To qualify for an OIC, the taxpayer must have filed all tax returns, made all required estimated tax payments for the current year, and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.
In most cases, the IRS won’t accept an OIC unless the amount offered by a taxpayer is equal to or greater that the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay.
The RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. In addition to property, the RCP also includes anticipated future income less certain amounts allowed for basic living expenses.
Reasons for the Offer
The IRS may accept an OIC based on three grounds:
• First, the IRS can accept a compromise if there’s doubt as to liability. A compromise meets this only when there’s a genuine dispute as to the existence or amount of the correct tax debt under the law.
• Second, the IRS can accept a compromise if there’s doubt that the amount owed is fully collectible. Doubt as to collectivity exists in any case where the taxpayer’s assets and income are less that the full amount of the tax liability.
• Third, the IRS can accept a compromise based on effective tax administration. An offer may be accepted based on effective tax administration when there’s no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
IRS Forms to Use
When submitting an OIC based on doubt as to collectivity or effective tax administration, taxpayers must use the most current version of Form 656, Offer in Compromise, and also submit Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses.
A taxpayer submitting an OIC based on doubt as to liability must file a Form 656-L.pdf, Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A (OIC) and/or Form 433-B (OIC). Form 656 and referenced collection information statements are available in the Offer in Compromise Booklet, Form 656-B.pdf.
Application Fee
In general, a taxpayer must submit an application fee for the amount stated on Form 656. Don’t combine this fee with any other tax payments.
However, there are two exceptions to this requirement:
• First, no application fee is required if the OIC is based on doubt as to liability.
• Second, the fee isn’t required if the taxpayer is an individual (not a corporation, partnership, or other entity) who qualifies for the low-income exception. This exception applies if the taxpayer’s total monthly income falls at or below 250 percent of the poverty guidelines published by the department of Health and Human Services. Section 1 of Form 656 contains the Low Income Certification guidelines to assist taxpayers in determining whether they qualify for the low-income exception.
A taxpayer who claims the low-income exception must complete section 1 of Form 656 and check the certification box.
Payment Options Types
Lump Sum Cash Offer –
Taxpayers may choose to pay the offer amount in a lump sum or in installment payments. A “lump sum cash offer” is defined as an offer payable in 5 or fewer installments within 5 or fewer months after the offer is accepted. If a taxpayer submits a lump sum cash offer, the taxpayer must include with the Form 656 a nonrefundable payment equal to 20 percent of the offer amount.
This payment is required in addition to the application fee. The 20 percent payment is generally nonrefundable, meaning it won’t be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance.
Instead, the 20 percent payment will be applied to the taxpayer’s tax liability. The taxpayer has a right to specify the particular tax liability to which the IRS will apply the 20 percent payment.
Periodic Payment Offer –
An offer is called a “periodic payment offer” under the tax law if it’s payable in 6 or more monthly installments and within 24 months after the offer is accepted. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with the Form 656.
This payment is required in addition to the application fee. This amount is generally nonrefundable, just like the 20 percent payment required for a lump sum cash offer. Also, while the IRS is evaluating a periodic payment offer, the taxpayer must continue to make the installment payments provided for under the terms of the offer.
These amounts are also nonrefundable. These amounts are applied to the tax liabilities and the taxpayer has a right to specify the particular tax liabilities to which the periodic payments will be applied.
Upon acceptance of an OIC, the taxpayer may no longer designate offer payments to any tax liability specifically covered in the offer agreement.
Suspension of Collection
Ordinarily, the statutory time within which the IRS may engage in collection activities is suspended during the period that the OIC is under consideration, and is further suspended if the OIC is rejected by the IRS and where the taxpayer appeals the rejection to the IRS Office of Appeals within 30 days from the date of the notice of rejection.
Offer Terms
If the IRS accepts the taxpayer’s offer, the IRS expects that the taxpayer will have no further delinquencies and will fully comply with the tax laws. If the taxpayer doesn’t abide by all the terms and conditions of the OIC, the IRS may determine that the OIC is in default.
For doubt as to collectivity and effective tax administration OICs, the terms and conditions include a requirement that the taxpayer timely file all tax returns and timely pay all taxes for 5 years from the date of acceptance of the OIC.
When an OIC is declared to be in default, the agreement is no longer in effect and the IRS may then collect the amounts originally owed (less payments made), plus interest and penalties. Additionally, any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
Right to Appeal
If the IRS rejects an OIC, the taxpayer will be notified by mail. The letter will explain the reason that the IRS rejected the offer and will provide detailed instructors on how the taxpayer may appeal the decision to the IRS Office of Appeals.
The appeal must be made within 30 days from the date of the letter.
Return of an Offer
In some cases, an OIC is returned to the taxpayer rather that rejected, because the taxpayer didn’t submit necessary information, filed for bankruptcy, failed to include a required application fee or nonrefundable payment with the offer, hasn’t filed required tax returns, or hasn’t paid current tax liabilities at the time the IRS is considering the offer. A returned offer is different from a rejection because there’s no right to appeal when the IRS returns the offer.
However, once current, the offer may be submitted again.
*Note: OIC application received on or after March 27, 2017, are now returned without consideration if taxpayers haven’t filed all required tax returns.
The application fee is returned and any required initial payment submitted with the OIC is applied to outstanding tax debt.
This policy doesn’t apply to current year tax returns if there is a valid extension on file.
by Fresh Start Tax | Feb 12, 2018 | Tax Help
I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?
I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?
Answer:
Social security benefits include monthly retirement, survivor and disability benefits. They don’t include supplemental security income (SSI) payments, which aren’t taxable.
The net amount of social security benefits that you receive from the Social Security Administration is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on your income tax return (Form 1040, line 20a or Form 1040A, Line 14a).
The taxable portion of the benefits that’s included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year.
You report the taxable portion of your social security benefits on Form 1040, line 20b or Form 1040A, line 14b.
To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
• One-half of your benefits; plus
• All of your other income, including tax-exempt interest.
The base amount for your filing status is:
• $25,000 if you’re single, head of household, or qualifying widow(er),
• $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
• $32,000 if you’re married filing jointly,
• $0 if you’re married filing separately and lived with your spouse at any time during the tax year.
If you’re married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits.
Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours when figuring on a joint return if any of your benefits are taxable.
