Taxes Are Due – Better Late Than Never!

Posted on April 14, 2014 by Kursti Nakagawa

Tax Time – Better Late Than Never!

Taxes Are Due – Better Late Than Never: The old saying “Better late Than Never!” applies to the filing tax of returns just as it does to most other aspects of life. With the April 15^th tax deadline on the horizon, many taxpayers are rushing to file either a completed tax return or a request for an automatic six-month extension. Failure to do so will subject the delinquent taxpayer to late filing penalties that will begin to accumulate along with interest that will be charged on any overdue tax balances. Although late filing penalties can be abated in certain specific instances when there is a valid reason for filing late, the reasons for the delay must be well documented. Even when these conditions are met, the IRS does not grant this form of tax relief automatically.

According to IRS tax filing statistics, approximately 75% of those taxpayers who were expected to file a 2013 tax return had already filed a week before the filing deadline. Looking at these figures in another way, about one out of every five tax filers waits until the week leading up to April 15^th to submit their return. Most tax returns (about 90%) are filed electronically. Of approximately 135 million people who will file a 2013 tax return, almost 80 million will receive a refund, The average refund is expected to be approximately $2800. These statistics mean that the IRS will be refunding over $200 billion for Tax Year 2013, about $66 million of this amount through direct deposit.

Regardless of your current or projected filing status, the CPAs and Enrolled Agents at Professional Tax Resolution would like to wish you well on Tax Day 2014. Should you be one of those taxpayers who fail to meet tomorrow’s tax deadline, we are here to help you review your tax filing and tax settlement options and communicate with the IRS on your behalf. Happy filing!

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

Avoiding an IRS Tax Audit

Posted on March 26, 2014 by Kursti Nakagawa

Avoiding an IRS Tax Audit

Avoiding an IRS Tax Audit: It is important to realize that receipt of an IRS Notice announcing that a tax return has been selected for an audit does not necessarily mean that there is an error on the return or that the IRS suspects the taxpayer or business submitting the return has done something dishonest. An IRS Audit is simply the process used by the IRS to verify the accuracy of a tax return by confirming specific items reported on the return. The audit process is always announced by an official IRS Notice which includes a list of the specific items of documentation being requested and a statement of the deadline by which these items must be provided.

Although the IRS selects tax returns for audit in a variety of ways, including random sampling, there are certain factors that increase the likelihood of a return being selected for further scrutiny. Several of these red flags are outlined below.

Inaccuracies and Omissions

The IRS computer systems are very sophisticated and will pick up any number such as a social security number or a birth date that has been inaccurately recorded. In addition, the Agency receives copies of all 1099’s and W-2’s and will be alerted if the amounts reported on any of these forms are missing or listed incorrectly.

High Income

Although earning a higher income is otherwise desirable, taxpayers with annual incomes in excess of $250,000 are more likely to have their tax returns audited than those with lower incomes.

Sizeable Charitable Deductions

If a taxpayer claims a large charitable contribution or claims charitable deductions that represent a relatively large portion of their annual income, their tax return is more likely to be audited. Since the IRS computers are programmed with the standard charitable contribution for each income level, returns that show deductions in excess of this amount are more likely to be flagged for an audit.

Deductions for a Home Business

Returns that claim home office deductions have a higher than random probability of being selected for an audit. While home office deductions can be great write-offs, it is important to have the proper documentation and to only claim space that is used regularly and exclusively for business.

Foreign Bank Accounts

Because the IRS has recently stepped up its scrutiny of money held in offshore accounts, returns showing foreign assets are more likely than others to be selected for an audit. Taxpayers or businesses holding foreign assets should be especially careful to follow all established reporting procedures set by the IRS.

It is the legal responsibility any individual or business whose return is selected for an audit to substantiate the specific income and deduction items specified in the official IRS Notice announcing the audit. All required documentation must be provided within the specified time period. If additional taxes and interest are assessed by the IRS as the result of the audit, these amounts are usually matched by the State Tax Agency. Although the combined interest and penalty assessments resulting from an audit can be significant, it is important to realize that many properly conducted audits result in no additional tax assessments. If an individual or business disagrees with the results of an audit, they have the right to file an appeal though the IRS Appeals Division provided the appeal is submitted within 30 days of the issuance of the auditor’s report.

If your tax return has been selected for an audit, our experienced professionals can assist you in collecting the necessary documentation and preparing your response. The licensed CPAs, Tax Attorneys and Enrolled Agents at Professional Tax Resolution have extensive experience in the area of audit defense and are authorized to communicate directly with the IRS on your behalf. They have successfully represented many clients in IRS Audits that have resulted in either a refund or acceptance of the original tax return. For more information about our services, call us today at 877.889.6527 or visit us at www.professionaltaxresolution.com.

Celebrities Who Ignored Tax Deadlines

Posted on March 17, 2014 by Kursti Nakagawa

Celebrities Who Ignored Tax Deadlines

Celebrities who Ignored Tax Deadlines – Ignoring tax deadlines and failing to pay outstanding tax balances can have severe consequences. Interest and penalties accumulate over time and can amount to a significant financial burden. In addition, the IRS has the authority to use more aggressive collection techniques such as tax levies, tax liens and wage garnishments when outstanding tax balances are not paid in full. The following examples illustrate the consequences suffered by some well known individuals who ignored their tax responsibilities.

This celebrity was slapped with a $6.2 million tax lien.

Although actor Nicolas Cage earned over $40 million in 2009, the IRS slapped him with a $6.2 million tax lien in that same year. He was apparently spending more money than he earned on such luxury items as yachts, homes, art, jewelry and vintage cars. It has recently been reported that Cage is trying to repair his finances and pay his tax debt by selling some of his properties as well as an entire island in the Bahamas!

This celebrity was arrested for state income tax evasion.

In December of 2012, actor Stephen Baldwin, the youngest of the Baldwin brothers, was arrested for state income tax evasion. The charge was due to the fact that he owed the State of New York over $350,000 in back taxes. This past March, he pled guilty to felony charges and paid $100,000 of the amount he owed. He must pay the balance of his past due tax liability by the end of this month in order to avoid jail time.

This celebrity accumulated a back tax balance of over $400,000.

When actor Gary Busey filed for bankruptcy protection in December of 2012, he was able to discharge more than $50,000 in liabilities. However, because tax debt is not covered by bankruptcy protection, he was left with an outstanding tax debt of $451,000. Time will tell whether Busey will suffer legal consequences or be able to negotiate a tax settlement agreement with the IRS to pay his back tax bill.

This celebrity is over $10 million in debt, most of it due to back taxes.

When singer Dionne Warwick filed for bankruptcy protection this past March, she listed only $25,000 in assets and over $10 million dollars of debt. Since most of this debt is apparently due to back taxes which are not relieved with a bankruptcy petition, she still faces an uphill financial battle. However, she is currently living in Brazil and working to pay her tax debt. Since she has an earning capacity of over $20,000 a month, her situation may not be as dire as some others who have monumental tax liabilities.

This celebrity was hit with multiple tax liens.

The IRS has filed multiple tax liens against R&B singer Toni Braxton in an attempt to collect almost $400,000 in back taxes owed for tax years 2008 and 2009. Although Braxton has filed for bankruptcy protection twice in recent years, the filings did not eliminate her tax debt. To date, there is no report that Braxton has resolved her tax problem.

This celebrity owes more than $1.5 million in unpaid taxes.

A tax lien was originally filed against O.J. Simpson in 1999 in an attempt to collect more than $1.5 million in delinquent taxes. However, due to the fact that Simpson is currently serving a 33-year prison sentence in a California correctional facility, it is unlikely that he will be able to resolve his tax bill!

As the above examples illustrate, it is never a good idea to ignore your tax responsibilities. The IRS is a powerful collection agency and will take whatever steps are necessary steps to collect the money they are owed. As the above examples illustrate, the worst choice a delinquent taxpayer can make is to ignore outstanding tax liabilities and hope they will go away. When the necessary funds are not available to pay a tax balance in full, it is advisable for a taxpayer to contact the IRS and attempt to take advantage of one of the many tax settlement options they offer.

If you have a back tax balance that you are unable to pay, our tax settlement professionals can help you determine the best course of action to resolve it. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years of in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

Taxpayers Have Rights Too!

Posted on March 6, 2014 by Kursti Nakagawa

Taxpayers Have Rights Too! – The IRS is a powerful collection agency and has the right to collect any tax amounts which are owed. However, taxpayers also have certain guaranteed rights and tax time is a good time to be reminded of what those rights are. In addition to the obvious guaranty of privacy, confidentiality and courteous, professional service, the IRS has numerous policies and procedures in place that are designed to protect the taxpayer. Some of these policies and procedures are discussed below.

Taxpayers Have Rights Too!

Right to Apply for Help With Back Taxes

The IRS offers numerous tax settlement options for taxpayers who have outstanding tax liabilities or are unable to pay the entire balance of their current tax bill. Provided they meet the qualification criteria, taxpayers have the right to apply for any of these tax settlement options which include Offers in Compromise, full payment and partial payment installment agreements, Innocent Spouse Relief and penalty abatements. The application process for these various tax settlement options can be handled either alone or with help from a tax professional who is licensed to represent clients before the IRS.

Right to Enlist Professional Representation

A taxpayer always has the right to contact the IRS directly in order to ask a question, resolve a tax dispute, respond to an audit request, appeal the outcome of an audit or negotiate a tax settlement agreement. They also have the right to have professional representation in such matters as long as the representative is person who is authorized to practice before the IRS. These authorized individuals include licensed CPAs, Tax Attorneys and Enrolled Agents.

Right to Appeal in IRS Decision

A taxpayer has the right to appeal any decision or action passed down by the IRS. Such decisions and activities include the amount of a tax liability, the outcome of an audit or the results of enforced collection activities such as liens, levies and wage garnishments. As stated in the previous entry, the taxpayer can choose to represent themselves in the appeal process or be represented by a licensed CPA, Tax Attorney or Enrolled Agent.

If you need help with an unresolved tax, our tax settlement professionals can provide you with the services you are looking for. Call us today at 877.889.6527 or fill out the online request form at www.professionaltaxresolution.com to receive a free, no obligation consultation. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option work best for your specific set of financial circumstances.

Waiting for a Tax Refund?

Posted on February 19, 2014 by Kursti Nakagawa

Where is My Tax Refund?

Waiting for a Tax Refund? It is tax time and many taxpayers who have already submitted their 2013 tax returns are now anxiously awaiting a refund. If you are one of those individuals, the good news is that you can check the status of your refund using the Get Your Refund Status tab on the home page of the IRS website. This tool will give you an update on your refund status within four weeks from the time a paper return was mailed or within 24 hours after a return has been e-filed. You can also call the IRS for a refund update but phone updates take longer to become available. Refund information is only accessible by phone if it has been six weeks since the mailing of a paper return or at least 21 days from the date of an electronic filing.

The refund status tool on the IRS website will tell you one of the following three things about your tax refund: 1) Refund Received, 2) Refund Approved or 3) Refund Sent. Once the site says that a refund has been sent, it may take several weeks for the funds to arrive if the taxpayer has requested a debit card or a paper check. Direct deposits into bank accounts should take less than five days. It should be noted that tax returns with mathematical errors, missing information or incorrect information always take longer to process. This is also true when the returns involves special issues such as identity theft, fraud or duplicate claims for the same dependent, among other things.

The good news for taxpayers expecting a tax refund is that Congress recently voted to extend the debt ceiling with no strings attached until, March 15, 2015. This means that the government will have the necessary funds to pay all the refunds it owes though this tax season and most of the next one. (solidstonefabrics.com) Although the IRS does pay interest on any refunds that are not issued within 45 days of the filing of a return, there is no law that says refunds have to be paid within a certain time period. Interest payments aside, most taxpayers just want their refund money so the recent vote was very good news for all those who overpaid their tax bills in 2013.