by steve | Oct 2, 2009 | Tax Help, Uncategorized
What do you do if you have never filed a tax return and owe back taxes?
There are several things to do. After years of experience working at the Internal Revenue Service I have dealt with this situation thousands of times. First of all, most people want to get back in the system and do not know what to do to get there. Follow this advice. Get current in the situation you are in. If you are an employer, start making current payroll tax deposits. If you are a sole proprietor, make an estimated tax payment. If you are a wage earner, make sure you have enough withholdings taken out of your check. The next step is to get all your tax returns prepared by a professional company, so you can get the lowest possible tax due to the Internal Revenue Service. It should be noted that a number of our clients we have seen over the years DO NOT owe tax because they have had the proper withholding taken out and simply do not owe any money.
The next and most important step if you owe tax is to find out what your exit strategy will be. You MUST sit down with a professional and find the area that the IRS will attack. Their mission is for you to liquidate all assets immediately and set up a payment plan. There is room for tax planning so that the IRS will not strip you of all your assets.
Prepare to have a federal tax lien filed and/or your pension plan or 401 hit.
We can really help these situations. The proper planning is necessary to ensure the best results for you to move forward.
by steve | Oct 2, 2009 | Tax Help, Uncategorized
The IRS has come out with some new softening approaches on dealing with the new hardships that are hitting the taxpayer in the wallet. Here is what you can now expect.
Postponement of Collection Actions: IRS employees will have greater authority to suspend collection actions in certain hardship cases where taxpayers are unable to pay. The IRS is just starting the program this year. This includes cases when the taxpayer has recently lost a job, is relying solely on Social Security or welfare income or is facing devastating illness or significant medical bills. If an individual has recently encountered this type of financial problem, IRS assistors may be able to suspend collection without documentation to minimize burden on the taxpayer. Documentation is needed to prove these situations.
Added Flexibility for Missed Payments: The IRS is now allowing more flexibility for previously compliant individuals in existing Installment Agreements who have a tough time making payments because of a job loss or other financial hardship. The IRS may allow a skipped payment or a reduced monthly payment amount without automatically suspending the Installment Agreement. Taxpayers in a difficult financial situation should contact a tax professional to help with their situation.
Additional Review for Offers in Compromise on Home Values: An Offer in Compromise, an agreement between a taxpayer and the IRS that settles the taxpayers tax bill for less than the full amount owed, may be an option for taxpayers experiencing economic difficulties. However, the equity taxpayers have in real property can be a barrier to an OIC being accepted. With the uncertainty in the housing market, the IRS recognizes that the real-estate valuations used to assess ability to pay may not be accurate. So in instances where the accuracy of local real-estate valuations is in question or other unusual hardships exist, the IRS is creating a new second review of the information to determine if accepting an offer is appropriate.
Prevention of Offer in Compromise Defaults: Taxpayers who are unable to meet the periodic payment terms of an accepted OIC will be able to contact the IRS office handling the offer for available options to help them avoid default.
IRS seems to be working hard to help taxpayers but only time will tell.
by steve | Oct 2, 2009 | Tax Help, Uncategorized
As we have discussed in the past, there are several ways to settle your case. This is the third of the bunch.
The third type of Settlement program which may be right for you in the Offers in Compromise program is the Deferred Periodic Payment. This type of Offer is payable in six or more installments, 25 or more months from the IRS received date, but within the statutory period for IRS to collect the money which is usually 10 years from the date of assessment. The Offer must be accompanied with the first proposed installment and all additional installments paid in accordance with your purposed terms of the Offer you sent in. These payments are to be continued to be made until the IRS works and closes the Offer.
The pros about this type of Offer is that the IRS is off your back and if you keep the terms of the agreement the case is settled for good.
The con side of this type of case is that you cannot miss a payment and that the lien is not released until all payments are made. You really need to consult a professional to help make the proper decision on all types of Offers.
by steve | Oct 1, 2009 | Tax Help, Uncategorized
YOU CAN MAKE PAYMENTS TO SETTLE YOUR CASE!!!!!!!!!!!!!!!!!!!!!!!!
Did you know that you can settle your case and make payment terms? The IRS offers three programs in which you can settle your case. Which is best for you?
The first program is a Lump Sum Settlement Program. This program allows the taxpayers to pay the offered amount in a short period of time in order to totally get this behind them . This is called the “Lump Sum Cash Offer”. The payments are due in five or less installments and a 20% payment must be included with the offer.
Here are the pros and cons. The pros are that you get rid of your case as soon as you give them the money. The IRS is off your back, and your lien gets released as soon as the check is cleared. Make sure the lien gets removed from your credit report.
The con is huge! The IRS does not accept the Offer, they keep the money and the case is still open. Caution should be used before the filing of this offer. The IRS will work this case as though it is brand new and now they have all your financial data. You can however, refile another offer. You could change what the IRS did not like on your first offer, then resubmit. This usually works.
by steve | Oct 1, 2009 | Tax Help, Uncategorized
There are certain offers on cases that the IRS cannot accept. Though they are rare, here is a partial list of some of these types of cases:
They usually involve cases that are controlled by the Department of Justice.
The taxpayer’s liability for part or all of the periods are in litigation.
The federal liability for all or part that the taxpayer owes has been reduced to a federal judgment.
The offer received by the IRS is for tax periods that cover restitution that was court ordered. The IRS cannot modify the terms of any court order whatsoever.
The IRS has a civil or criminal prosecution pending against the taxpayer and those cases are already with the Department of Justice or the U.S. Attorney’s office.
The case was closed by Criminal Investigation and there is an indicator on that specific account that restitution was ordered. Counsel office must approve any action.
The offer is returned based on the collection division review.
Any case that has been high profile, in the newspapers and have public appeal are usually turned down by IRS due to public opinion of the agency, and rightly so.
by steve | Oct 1, 2009 | Tax Help, Uncategorized
How many types of OIC exists?
There are three grounds on which the IRS accepts an OIC. This is based on policy statement P-5-100.
Doubt as to Collectibility: The goal of this Offer is to achieve the best possible settlement for the Federal Government. Also, they want to settle in the earliest possible time with the least cost to the government. They set the rules.
Doubt as to Liability: The goal of this Offer is to make sure the liability is correct. There are many times, that because of various legal issues, the assessment that was made by Internal Revenue Service itself was incorrect. This Offer allows the taxpayer a chance to have the IRS reexamine the case to make sure the assessment is, in fact, correct.
Effective Tax Administration: The goal of this Offer is based on a case by case basis. Due to extraordinary circumstances, it is best for the government to settle this case. These cases usually involve sickness or other life threatening situations. They are rare, but possible when the situation exist.
