The Blog

Franchise Tax Board Assessment Stopped

Franchise Tax Board Assessment Stopped Just one month after finalizing an Offer in Compromise with the Internal Revenue Service, Mr. C contacted Professional Tax Resolution with another tax settlement issue. Having successfully settled his federal income tax debt for less than 20% of the initial amount owed, he now needed our services to help with resolving an outstanding tax liability with the State of California. Just prior to contacting our firm for the second time, he had received and official notice from the California Franchise Tax Board informing him that he owed a back tax amount of 80K for tax year 2005. This amount included both penalties and interest that had been compounding over time. Mr. C was both confused and upset when he received … Continue reading

Pros & Cons of Outsourcing the Collection of Tax Debt

Pros and Cons of Outsourcing the Collection of Tax Debt The Senate Finance Committee has recently revived their discussion of outsourcing the collection of back taxes. According to certain estimates, turning the collection of delinquent taxes over to private collection agencies would save the government more than two billion dollars over a period of ten years. However, opponents of privatization maintain that this would not be the case. In addition to emphasizing the potential threat to taxpayer security, they point to attempts at outsourcing the collection process that have not worked particularly well in the past. Time will tell whether the Treasury Secretary, who currently has the authority to make such a switch, will give it another try. Those who favor privatizing the collection of … Continue reading

Tax Fraud Brings Serious Consequences

Tax Fraud Brings Serious Consequences It turns out that tax fraud brings serious consequences as evidenced by the sentencing, earlier this year, of Rashia Wilson to 21 years in prison for multiple counts of aggravated identity theft and wire fraud. Ms. Wilson, otherwise known as the “Tax Fraud Queen,” was originally convicted and sentenced in 2013 when she plead guilty to stealing over $3 million dollars in a tax refund scam. Her original sentence, which was thrown out on appeal in 2014 due to errors in applying sentencing guidelines, was reinstated earlier this year. From April of 2009 through September of 2012, Rashia Wilson and several accomplices were successful in carrying out a scheme that defrauded the federal government of approximately $3.1 million in tax … Continue reading

New Agreement Increases Fraud Protection

New Agreement Increases Fraud Protection As a result of a Security Summit that was convened in March, the IRS has announced a comprehensive new agreement addressing the issues of tax fraud and identity theft. The agreement, which has been a work-in-progress over the past twelve weeks, comes as a result of the combined efforts of federal and state tax administrators, tax preparers and tax and payroll software firms. It includes new steps to validate taxpayer identity, increase information sharing between government and the tax industry and identify fraud schemes. According to Tax Commissioner John Koskinen, the agreement “represents a new era of cooperation between the IRS, states and the electronic tax industry.” Over the past twelve weeks, the members of the Security Summit have focused their efforts on several new initiatives, all aimed … Continue reading

IRS Announces Online Security Breach

IRS Announces Online Security Breach On Tuesday, May 26, 2015, the IRS announced the detection of a huge security breach affecting over 100,000 United States taxpayers. This appears to be a significant online breach that occurred during the course of the 2015 tax season. According to the IRS, thieves used an online IRS agency service to obtain the previous year’s tax return information for about 100,000 individuals and families. These identity thieves have been very persistent and sophisticated. From February to May, they have been using stolen social security numbers and other relevant personal information to access tax agency systems in order to file tax returns and get refunds. IRS Commissioner John Koskinen issued a statement saying that approximately 200,000 tax transcripts were downloaded with … Continue reading

Smart Ideas for Spending an IRS Tax Refund

Smart Ideas for Spending an IRS Tax Refund After paying the government all year long, many taxpayers will see some money coming their way now that it is tax refund time. Even better is the fact that tax refunds have been on the rise over the past several years. The average tax refund check has risen from $2,371 in 2009 to $2,893 in 2015. However, before these funds are used to pay for an expensive vacation or a finance a wild spending spree, it might be wise consider some of the following smart ideas for putting your IRS tax refund dollars to work: Invest in your home. Has your leaky roof been worrying you? Has your garage door not been working as well as it … Continue reading

Common Misconceptions about the IRS

A Few Common Misconceptions about the IRS Audits are not as common as they may seem. Although many taxpayers worry that their tax return might be selected for an IRS audit, the fact is that less than two percent of personal tax returns are audited by the IRS each year. On top of this, even if a return is selected for further examination, the IRS usually just contacts the taxpayer by mail and asks them to provide documentation to support certain specific items. Following this communication (aptly labeled a correspondence audit), there are three possible outcomes, none of which are accompanied by a serious consequence. An additional tax amount will be assessed, the return will be accepted as originally submitted or, in some cases, a tax refund may even be issued. Making an … Continue reading

Can the IRS Keep Your Refund?

  It is tax refund time and most taxpayers already have a plan for their tax refund. They will save it, invest it, spend it or maybe do a little of each. However, some taxpayers will file their tax return and never receive a refund. This is due to the fact that the IRS can keep a taxpayer’s refund to cover certain types of debt, some of which are discussed below. A Back Tax Balance with the IRS: If a taxpayer has a back tax balance with the IRS (even if they are currently enrolled in a payment plan), the agency will keep either all or part of that individual’s tax refund and credit it toward payment of their back tax balance. Although the delinquent … Continue reading

The Tax Extension Option

The Tax Extension Option You are not alone if you do not file your tax return on or before April 15th. Although this is the official deadline for the filing of personal tax returns, each year more and more people apply for an automatic six-month tax extension. The number of taxpayers requesting an extension increased from 11 million in 2011 to over 13 million in 2013, an increase of almost 20% over the two-year period! Another interesting fact is that, in tax year 2014, 25% of those individuals who had requested and extension were still working on their tax returns in September, just one month before the October 15th extension deadline. Although procrastination is one reason for requesting a tax extension, there are other factors … Continue reading

Why You Should File Your Taxes

Why You Should File Your Taxes by April 15   April 15th is an important filing deadline for individual taxpayers. If the Internal Revenue Service does not receive either a completed tax return or an application for a six-month tax extension by this date, they will automatically assess a failure-to-file penalty. In addition, they will begin to assess a failure-to-pay penalty on any tax amounts owed. Although the failure-to-file penalty can be diverted by applying for a six month tax extension, late payment and interest assessments will automatically begin to accrue as of the April 15th tax deadline regardless of whether a tax extension has been filed. Because the penalties and interest described above are compounded over time, the financial consequences of failing to file tax … Continue reading

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