by steve | Dec 21, 2009 | Tax Help, Uncategorized
The National Standards Program
The Internal Revenue Service has set up Collection Standards to help determine the taxpayer’s ability to pay back taxes in a timely, reasonable and efficient manner. The IRS has set up major category items that each taxpayer will use nationwide. These Standards will change from time to time and will be yearly updated by the IRS. You may directly contact us for these updates.
The necessary expense tests is defined as “expenses that are necessary to provide for a taxpayer and their families health, welfare and production of income.”
The National Standards for food, clothing and other items apply nationwide no matter the region. The National Standards amounts account for their family size without at all questioning the amount spent. No documentation is required.
The National Standards allowances for housing and utilities and transportation, are all known as LOCAL STANDARDS. These vary from location to location. In most cases the taxpayer will be given the amount actually spent or the LOCAL STANDARD, whichever is less. Generally the total number of persons allowed for the necessary living expense should be the same as the exemptions found on the individual tax return. Exceptions are allowed. The IRS may determine that the facts of certain cases or situations are inadequate to provide for the basic living expenses. The IRS may allow for actual expenses. They have proved themselves to be very reasonable, but may differ from agent to agent and the type of day they are having.
It is critical that documentation supports a determination when using the national and local standards or actual expenses. The IRS usually requires documentation for the past three months or sometimes more. They will also require bank statements for the last three months.
The National Standards have also been established for MINIMUM allowances for health care and out of pocket expenses. The taxpayers are allowed the standard amount without question of the monies spent. They also allow for the actual medical expenses if substantiated.
* The National Standards for food and clothing are derived from the Bureau Of Labor Statistics and the Consumer Expenditure Survey. These surveys collect information on families and their buying habits. These standards are grossly inaccurate and do not reflect the true facts. However, there is little we can do to change these figures.
* The National Standards for housing and utilities are derived per Census and BLS data that are provided by each State and County Housing and Utilities standards. Included are mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone. The tables include five categories for one, two, three, four, and five or more persons in a household.
* The National Standards for Out of Pocket Health Care have been established for out-of-pocket health care expenses including medical services, prescription drugs, and medical supplies (e.g. eyeglasses, contact lenses, etc.).
The table for health care allowances is based on Medical Expenditure Panel Survey data and uses an average amount per person for taxpayers and their dependents under 65 and those individuals that are 65 and older.
The out-of-pocket health care standard amount is allowed in addition to the amount taxpayers pay for health insurance.
* The National Standard for taxpayer’s vehicles consists basically of two different parts. Nationwide figures for monthly loan or lease payments referred to as ownership costs, and additional amounts for monthly operating costs broken down by Census Region and Metropolitan Statistical Area. The ownership cost portion of the transportation standard, although it applies nationwide, is still considered part of the Local Standards.
The ownership costs provide “maximum allowances” for the lease or purchase of up to two automobiles if allowed as a necessary expense. A single taxpayer is normally allowed one automobile.
The operating costs include maintenance, repairs, insurance, fuel, registrations, licenses, inspections, parking and tolls.
If a taxpayer has a car payment, the allowable ownership cost added to the allowable operating cost equals the allowable transportation expense. If a taxpayer has a car, but no car payment, only the operating costs portion of the transportation standard is used to figure the allowable transportation expense. In both of these cases, the taxpayer is allowed the amount actually spent, or the standard, whichever is less.
These National Standards are a gross misrepresentation of the average taxpayer and little has been done to help the taxpayers burdened by this. If you click on this link you will find the National Standards:
http://www.irs.gov/individuals/article/0,,id=96543,00.html
We at Fresh Start Tax have found many ways to make the most out of the National Standards.
by steve | Dec 18, 2009 | Tax Help, Uncategorized
Fresh Start Tax lets all our blog friends know about the latest scams they should be made aware of. Here is an alert brought to you by the IRS.
The IRS and Fresh Start Tax warns taxpayers, businesses and individuals to be on the alert for e-mails and phone calls they may receive which claim to come from the IRS or other federal agency and which mention their tax refund or economic stimulus payment. These are almost certainly a scam from scam artists whose purpose is to obtain personal and financial information such as name, social security number, bank account and credit card or even PIN numbers from taxpayers which can be used by the scammers to commit identity theft. The e-mails and calls usually state that the IRS needs the information to process a refund or stimulus payment or deposit it into the taxpayer’s bank account. The e-mails often contain links or attachments to what appears to be the IRS Web site or an IRS “refund application form.” However genuine in appearance, these phonies are designed to elicit the information the scammers are looking for.
The IRS does not send taxpayers e-mails about their tax accounts.
Additionally, the way to get a tax refund or stimulus payment, or to arrange for a direct deposit, is to file a tax return.
Fresh Start Tax reviews all IRS alerts coming out and monitors them for information that needs to go out to all FST followers. This is an important consumer alert.
Remember, the IRS never sends out emails to individuals or businesses, so beware of suspicious e-mails that could lead to Identity Theft.
by steve | Dec 18, 2009 | Tax Help, Uncategorized
Thousands of individuals that owe back IRS taxes have an option open to them called the “Offer in Compromise”. Most people have not heard of the “Offer in Compromise” and it is underutilized as a form of IRS tax relief. One reason the “offer in compromise” option is not often used is that most individuals and professionals have not worked these type of cases with the IRS on a regular basis. Having former employees of the IRS is a huge advantage that Fresh Start Tax has for all taxpayers who owe money on back IRS taxes and want to settle their case. There are three types of “Offers in Compromise” available to taxpayers: (1) Inability to pay the tax (2) Doubt as to the liability (3) Special circumstances exist, this option, Effective Tax Administration. Qualifying for any of these three types of “Offer in Compromise” could reduce your tax significantly.
The Effective Tax Administration program exists for all those who agree that the tax liability is correct, and there is potential to collect the full amount of the tax owed, but a special circumstance exists. A special circumstance could be having a family member that requires special medical care and any funds saved are allocated to cover the cost of future medical care. These types of special circumstances would allow the Internal Revenue Service to consider an “Offer in Compromise”. To be eligible for this type of “Offer in Compromise” program, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
During these economic times, few people know that this option is open to them. Now is the time to take care of your back taxes and settle your IRS debt. The IRS understands the conditions many taxpayers are facing, but must follow their rules. It is time for you to use IRS rules to your advantage. With many individuals losing their houses and jobs, there is no better time than right now to file an “Offer and Compromise”. If you do not have the ability to pay the IRS the full amount owed or you have special circumstances, now is the time to settle your debt with the IRS.
by steve | Dec 18, 2009 | Tax Help, Uncategorized
Fresh Start Tax wants to remind car shoppers about a 2009 tax break. Take advantage of this if you can afford it .
Fresh Start Tax reminds individual taxpayers who are considering buying a new car that they have until Dec. 31, 2009 to take advantage of a tax break that may not be around in 2010. Do not forget this date.
Taxpayers or individuals who buy a qualifying “new motor vehicle this year”, after Feb. 16th, can deduct the state or local sales or excise taxes they paid on the first $49,500 of the purchase price. Why this start date, who knows? Qualifying motor vehicles include new passenger automobiles, light trucks, motorcycles and motor homes.
Individuals who itemize, as well as those who take the standard deduction can benefit from this tax break. In states without a sales tax, other taxes or fees can qualify if they are assessed on the purchase of the vehicle and are based on the vehicle?s sales price or as a per unit fee.
The deduction for taxpayers is reduced for joint filers with modified adjusted gross incomes between $250,000 and $260,000 and other taxpayers with between $125,000 and $135,000. Taxpayers with higher incomes “do not qualify”. These limitations are not fair to higher income families and should have been included in the package.
by steve | Dec 17, 2009 | Tax Help, Uncategorized
This is a question we get many times, especially during the economic downturn. The IRS is actually here to help the taxpayer and here is their ruling:
Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Details are on Form 982 along with its instructions, available now at irs.gov.
This is great news during this down economy, otherwise, all this cancelled debt would be taxable.
by steve | Dec 17, 2009 | Tax Help, Uncategorized
Emergency Tax Relief on enforcement action.
Many times taxpayers are unaware of the enforcement action that the IRS has taken because they have moved or never received the initial correspondence. This happens more times than you think and the IRS does little to correct the situation.
If the IRS has placed you in a situation that has caused a hardship or an emergency situation you should call us immediately.
We can deal with the IRS on your behalf taking the pressure, stress, and the worry out of your life.
The most common areas of emergency situations that need immediate relief
IRS tax levy;
IRS bank levy or bank garnishment;
IRS levy on wages or commissions;
IRS levy of social security or disability;
IRS federal tax lien filing;
IRS federal summons;( 2039)
IRS letter, notice or card requiring immediate attention.
The professionals at Fresh Start Tax, which include Tax Attorneys, CPA’S and former IRS agents have been dealing with these situations for over 60 years. Over those years we have gotten thousands of people immediate tax relief.
Steps required to get immediate help.
Power of Attorney – The first thing we do at Fresh Start Tax is file a Power Attorney. That way, we talk to the IRS so you don’t have to. We answer all the questions. We find out the problem and resolve it for you, all in your best interest.
We get an immediate case history and the next step is to find out the scope of the problem. We order a transcript history of your case and make sure we are dealing with all the issues so there are no future problems or unresolved issues.
The transcript gives us your history over the last 7 years.
