You Have to Pay Your Taxes

Posted on April 3, 2012 by Kursti Nakagawa

What is the law regarding the payment of federal income taxes?
Although taxpayers are initially given the responsibility of determining the amount of tax they owe by completing and filing the appropriate tax returns, paying income taxes is not voluntary. The requirement to file an income tax return and pay income taxes is clearly stated in the Internal Revenue Code, which imposes a tax on the income of individuals and corporations as well as estates and trusts. Failure to file an income tax return and submit payment of taxes with the return can result in harsh civil and criminal penalties, including fines and even imprisonment.

What are frivolous tax arguments?
Frivolous tax arguments are a group of arguments that are made by taxpayers who oppose compliance with federal tax laws. These arguments indicate that paying federal income taxes is voluntary and that certain categories of individuals are exempt from paying income taxes for reasons that have no merit.

What are the most common types of frivolous tax arguments?
Although frivolous tax arguments can take many forms, they most commonly fall into one of the following categories:

Paying income tax is voluntary These arguments maintain that the filing of federal income tax returns and the paying of federal income tax is voluntary. They contend that existing laws impose no legal obligation to either pay taxes or file tax returns.

Certain forms of income are exempt from taxation These arguments assert that certain forms of income are exempt from taxation for a variety of bogus reasons. One of the common variations of this argument is that military retirement pay is excluded from income tax. Other groundless contentions maintain that income from foreign sources is not taxable or that wages and tips received for personal services are not subject to taxation.

Taxpayer is not a United States Citizen The most common form of this argument is given by an individual who asserts that they are relieved of an obligation to abide by federal tax laws because they have rejected United States citizenship in favor of state citizenship.

Collection of taxes violates a Constitutional Amendment These arguments assert that the collection of income taxes violates one or more of the amendments of the United States Constitution. Some citizens refuse to pay taxes on the basis of religious or moral grounds that they say are guaranteed by the First Amendment. Others maintain that the payment of income taxes is some form of servitude that is in violation of the Thirteenth Amendment. Another common form of this argument is that federal income taxes represent the confiscation of property, which is prohibited by the Fifth Amendment.

What are the penalties for using a frivolous tax argument?
In order to deter taxpayers from wasting time and resources, the United States Tax Court imposes harsh penalties on individuals who attempt to avoid or delay paying income taxes through the use of groundless or frivolous arguments. In 2006, Congress passed the Tax Relief Health Care Act, which increased the maximum penalty imposed for submitting a frivolous tax return from $500 to $5,000. This amount was increased to $25,000 by an amendment passed in March 2007. In addition to increasing the penalty for submitting a frivolous tax return, this amendment included a list of 40 specific positions that were deemed frivolous by the United States Tax Court.

If you have failed to meet tax filing deadlines or have an unresolved tax liability, our experienced tax resolution professionals can provide you with the tax settlement help you need. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. The members of our staff have the knowledge and experience necessary to know which tax settlement option will most effectively resolve your specific back tax issues. Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation.

Expansion of the Tax Settlement Provisions of the Fresh Start Program

Posted on March 27, 2012 by Kursti Nakagawa

The Federal Government recently announced a major expansion of its Fresh Start Program which was initiated last year to help taxpayers stuggling with tax debt. The recent changes supplement efforts that were already in place under the original Fresh Start Program to help individuals and businesses meet their tax obligations and reach tax settlements. Three major areas targeted by the recent Fresh Start expansion are penalty relief, Installment Agreements, and Offers in Compromise. The changes to these areas of tax relief are outlined below.

Penalty Relief

What is the failure-to-pay penalty? The failure-to-pay penalty is an amount assessed by the IRS on any tax amount owed that is not paid by the filing deadline. It is usually assessed at the rate of one half of one percent per month with a maximum assessment of 25%. The failure-to-pay penalty is charged in addition to interest on the tax amount owed, which is usually three percent per year.
What are the provisions of the expanded penalty relief initiative? The expanded penalty relief initiative grants a six month grace period on failure-to-file penalties for two specific categories of taxpayers provided all tax amounts, penalties, and interest are paid in full by October 15, 2012. The groups of taxpayers covered by this provision are workers who were unemployed for 30 consecutive days at any time during 2011 up until the April 17^th filing deadline and self-employed individuals who experienced a decrease in income of 25% or more due to the downturn in the economy.
What are the restrictions on the expanded penalty relief initiative? In order to be eligible for expanded penalty relief, a taxpayer who is married filing jointly must not have an income in excess of $200,000 and must not have a tax debt greater than $50,000. The income of a taxpayer who is filing as single or head of household must not exceed $100,000.

Installment Agreements

What is an Installment Agreement? An Installment Agreement allows a taxpayer to pay the balance of a tax amount due in installments rather than paying the entire balance of the tax debt by the due date. While interest continues to accrue until the balance of the tax debt is paid in full, penalties are generally reduced during the payment period.
What are the provisions of the expanded Installment Agreement initiative? The expanded Installment Agreement initiative reduces taxpayer burden by easing the restrictions placed on qualifying for a streamlined Installment Agreement. The streamlined Installment Agreement has the taxpayer advantage of not requiring a financial statement. Under the provisions of the expanded Fresh Start tax settlement initiative, the maximum tax debt allowable for a streamlined Installment Agreement is raised from $25,000 to $50,000, and the maximum term of the payment period is extended from 60 months to 72 months.

Offers in Compromise

What is an Offer in Compromise? An Offer in Compromise is a tax settlement option that allows a taxpayer to settle a tax debt for less than the full amount owed.
What are the provisions of the expanded Offer in Compromise initiative? The guidelines outlined by the expanded Offer in Compromise initiative make this tax settlement option available to a much larger group of taxpayers. Taxpayers with an annual income of up to $100,000 can now qualify for an Offer in Compromise. In addition, the maximum tax debt ceiling allowed for qualification has been raised from $25,000 to $50,000.
What are the restrictions on the expanded Offer in Compromise initiative? While the recent expansion of the Fresh Start Program makes the Offer in Compromise tax settlement option available to a larger group of taxpayers, the IRS will generally not accept an Offer in Compromise if they believe the entire amount of the tax debt can be collected.

If you have an outstanding tax debt, we can help you determine whether you qualify for tax relief under the provisions of the Fresh Start Program. Following that determination, our experienced tax settlement professionals can help you submit your tax settlement request according to established IRS guidelines. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

Deceptive TaxMasters Firm Mishandles Clients’ Taxes

Posted on March 22, 2012 by Kursti Nakagawa

When choosing tax expert for your personal tax preparation needs or a business tax specialist for business tax preparation, it is highly important to choose a proven tax advisor with expertise in tax settlements and favorable reviews from previous clients.

This is what clients of TaxMasters, a recently bankrupted tax preparation company in Houston, Texas, learned after trusting their tax returns to this company, who had broadcast a nationwide commercial promising to settle tax debt for less. The State of Texas is suing Tax Masters because they advertised free consultations with a tax specialist, but calls were actually received by salespeople not qualified to give help with taxes. This would be a violation of the Texas Deceptive Trade Practices Act. TaxMasters may have delayed submitting clients’ taxes until all fees were collected from them. This was resulting in missed tax deadlines, incurring fees and interest owed to the IRS.

This recent blog on ProfessionalTaxResolution.com describes how to choose a tax settlement professional. For your business tax preparation needs, here are tips for selecting a business tax resolution specialist.

It is very important to know you are speaking with a tax professional and not a salesperson when you handle your taxes to avoid costly mistakes and deceptive practices. If you have trouble paying your taxes all at once, options like installment agreements through the IRS can split up the sum into more manageable monthly payments. An offer in compromise can also be reached, where taxpayer’s tax liability is settled for lower than full amount that is owed.

If you are in need of any type of tax settlement services or have tax debt, the qualified tax specialists at Professional Tax resolution can provide you with the help you need. Because our professionals are familiar with all of the available tax settlement options and are experienced at negotiating tax settlement agreements with the IRS, we can ensure that you will receive the maximum tax advantage for your specific financial situation. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

Professional Tax Resolution – A Good Choice for Your Tax Settlement Needs

Posted on March 16, 2012 by Kursti Nakagawa

The tax specialists at Professional Tax Resolution are a good choice for resolving your tax settlement issues. They are:

Licensed The tax resolution professionals at Professional Tax Resolution are Certified Public Accountants and Enrolled Agents. These are the only tax specialists who can represent you before the IRS on all tax issues, not just returns they have personally prepared.

Experienced The tax specialists at Professional Tax Resolution resolve tax debt issues for both individuals and businesses all day, every day. Because tax settlement is their only focus, they know how to successfully negotiate with the IRS to achieve the best tax resolution outcome for each client.

Knowledgeable The tax specialists at Professional Tax Resolution are familiar with all of the available tax settlement options and are well equipped to select the one that best fits each client’s specific situation to help with tax resolution. They have a thorough understanding of tax law and the experience to use this knowledge to successfully resolve any tax debt issue.

Honest and Ethical The tax specialists at Professional Tax Resolution are honest and ethical. They thoroughly analyze each client’s tax debt situation and provide a realistic evaluation of what type of tax settlement the client can expect. They never make extravagant promises they know they cannot keep.

Proven with a Great Track Record The tax specialists at Professional Tax Resolution have an established record of past accomplishments. Stories of past successes can be read on their website at professionaltaxresolution.com. Reviews can be found on numerous rating sites including Yelp and Merchant Circle.

If you have an outstanding tax liability, visit us today at professionaltaxresolution.com. With over 16 years of experience, our licensed tax professionals have the knowledge and experience necessary to provide you with the best tax settlement help available. Contact us today at (877) 889-6527 or info@protaxres.com to receive a free, no obligation consultation.

Tips for Taxes on Frequent Flier Miles

Posted on March 8, 2012 by Kursti Nakagawa

Did you know that you could be taxed on your frequent flier miles? That’s what thousands of Citibank customers learned when they received a 1099-MISC from Citi, which reported their miles as income to the IRS. These miles would have to be reported on their tax returns, or they could risk getting a notice from the IRS.

Understandably, some customers who were notified that 30,000 miles was considered $750 of income were furious and shocked that the bonus miles they earned from signing up for a Citibank credit card could be taxable. Some even asked to have miles canceled and were told by Citibank that they should have asked before the end of 2011, even though customers were not aware of this tax liability until they received the form.

Frequent flier miles can be categorized in a six ways, but here is what it boils down to: rebates (not taxable), promotions (taxable), or prizes (taxable). Rebates aren’t taxable because they are seen as a purchase price reduction. However, promotions, such as those bonus miles for signing up for a card, and prizes, such as winning free miles from a sweepstakes, are considered income.

The IRS hasn’t given definitive rulings outlining how frequent flier miles should be treated, but here are some general guidelines from industry experts:

Miles earned from travel are considered a rebate.
Miles earned from purchases on a credit card are considered a rebate.
Miles earned from business travel are not taxable according to a 2002 IRS ruling.
Miles earned from opening a credit can be considered a taxable promotion. However, some credit card companies consider it a rebate since there are spending requirements or annual fees associated with signing up.
Miles awarded for deposits to a mutual fund can be considered a promotion. While there is no definitive law, private-letter rulings have been found declaring that these miles are taxable.
Miles awarded from a sweepstakes are a taxable prize. Some winners have actually rejected their miles so they wouldn’t have to pay the taxes on them.

If you receive a tax form, it is very important to make sure that you take it into account when you are filing taxes, because this income has been reported to the IRS. Failure to do so could lead to tax debt, back taxes with interest, and penalties.

It can be confusing when you receive a surprise tax form. If you want to avoid mistakes while filing your return, or you have already filed and need an amended return, the tax professionals at professionaltaxresolution.com can help with your tax settlement. They have the expertise to help you navigate the intricacies of tax laws and regulations. If you need help with tax resolution, contact us at (877)-889-6527 or email info@protaxres.com to receive a free, no obligation consultation.