Tax Debt of 100k Settled for $13,150

Posted on January 13, 2015 by Kursti Nakagawa

Ms. H, a single mother, had suffered extreme misfortune in several areas. As a real estate agent, her income flat lined when the housing market crashed, making it difficult for her to meet her monthly financial obligations. To make matters worse, her son was involved in a car accident in which he suffered major head injuries. Then, while she was juggling medical bills as well as managing the care of her injured son, Ms. H received an official IRS Notice informing her of an outstanding tax liability. She had not filed tax returns for ten years and, according to IRS calculations, owed over $100,000 in back taxes. As would be expected, she was panic stricken about her dire financial situation.

When Ms. H contacted Professional Tax Resolution for help with back taxes, she was immediately placed in contact with a tax expert who set up a face to face meeting in order to determine the best solution for her specific situation. Following this meeting, our tax professionals got to work preparing and submitting the ten years of back tax returns. Although the returns showed that Ms. H owed a back tax balance in excess of $40,000, our tax team was not deterred. They promptly launched into the next phase of the tax resolution process which was to do a financial and demographical analysis of Ms. H’s situation. The analysis documented her financial hardship, making her an ideal candidate for an Offer in Compromise.

Once it was determined that Ms. H met the eligibility criteria for an IRS Offer in Compromise, our professionals promptly prepared and submitted the application. Within a short time, the IRS accepted the offer, successfully settling her federal tax debt of almost 100k for $6,150. In addition, the tax experts at Professional Tax Resolution negotiated an Installment Agreement with the California Tax Franchise Board whereby Ms. H was able to pay off the $7000 back tax balance owed to them in monthly installments of $110. Overall, her tax debt, which was originally recorded as over $100,000, was settled for $13,150!

The members of the Professional Tax Resolution team are devoted to their clientele and are always focused on negotiating the most beneficial tax settlement agreement possible. We sympathize with our clients and understand that each situation is unique. Please contact our office to see how our professionals can assist you. Our tax experts are experienced at communicating with the IRS and guarantee to follow your particular tax settlement process though to a final resolution. 

Is an Offer in Compromise Right for You?

Posted on August 20, 2014 by Kursti Nakagawa

Is an Offer in Compromise the Right Tax Settlement Option for You?

Is an Offer in Compromise the Right Tax Settlement Option for You?

An Offer in Compromise is a tax settlement option that allows a delinquent taxpayer to settle a back tax balance for less than the full amount owed. While it is an excellent way for a taxpayer who meets the IRS eligibility criteria to resolve a tax debt, not all taxpayers qualify. Because the acceptance criteria are specific and the application process is long and complicated, it is often best to consult a qualified tax professional for help with this tax settlement option.

What are the Offer in Compromise eligibility criteria?

A candidate for an IRS Offer in Compromise must meet one of the following three eligibility criteria: 1) doubt as to whether they are liable for the tax debt, 2) doubt as to whether they have the financial means to pay the full balance of the tax debt or 3) a determination by the IRS that an would be an effective means of resolving the tax debt.

What is the process for obtaining an Offer in Compromise?

Make an accurate determination of the back tax balance.

File all unfiled tax returns. Check previously filed returns for accuracy and file amended returns when necessary.

Determine and document eligibility.

Gather sufficient documentation to support one of the three Offer in Compromise eligibility criteria. This documentation may include tax returns, financial records, disability claims and medical records, among other things.

Submit the Offer in Compromise application.

Complete all necessary forms according to the set IRS guidelines and submit together with the necessary supporting documentation and required filing fees.

Supply additional information as requested.

Promptly submit any documentation requested by the IRS during the review period.

How long does it take to obtain an Offer in Compromise?

The IRS will begin to review an Offer in Compromise application as soon as it is submitted. The review process normally takes between six and twelve months but can take up to a maximum of two years. If the IRS does not officially accept or reject an Offer of Compromise petition within two years from the date it is submitted, they are mandated to accept the original offer.

What options are available for paying the balance of an Offer in Compromise?
Once on Offer in Compromise is accepted, three payment plans are available to pay off the settlement amount. The three plans, which differ as to the amount of the initial payment, the number of installment payments and the time period over which the installments are made, are designed to accommodate taxpayers with varying back tax balances and financial situations. The three available payment plans are as follows: 1) the Lump Sum Cash Payment, 2) the Short Term Periodic Payment and 3) the Deferred Periodic Payment. These three plans allow for an Offer in Compromise settlement amount to be paid in full in anywhere from five months to more than 25 months, but within the ten year statutory collection period.

If you have an unresolved tax debt, visit us today at www.professionaltaxresolution.com. With over 16 years of experience working with the IRS, our experienced professionals will help you determine which tax settlement option best meets your specific needs. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to learn more about our customized tax settlement services and to receive a free, no obligation consultation.

Do Not Ignore Mail from the IRS….

Posted on June 17, 2014 by Kursti Nakagawa

Ignoring Communication from the IRS Brings Serious Consequences

Why You Should Not Ignore Mail from the IRS – Although the issuance of an IRS Notice of Deficiency is usually the first step in the collection of an outstanding tax liability, ignoring it can have serious consequences. The Notice of Deficiency is an official communication from the IRS informing a taxpayer that the tax amount due shown on their tax return is less than the amount owed according to the calculations of the IRS. Because the IRS is allowed to collect a tax debt without proof that the debt exists, a taxpayer who receives an IRS Notice of Deficiency must either pay the tax liability shown on the notice or file a petition with the United States Tax Court contesting the tax amount owed. The burden of proof rests with the taxpayer.

A Notice of Deficiency is a formal written communication from the IRS. It is sent by certified or registered mail to a taxpayer’s last address of record for the purpose of announcing a tax deficiency. It must include an explanation of the deficiency together with a statement of the total amount of taxes, interest and penalties that have been assessed. In addition, the Notice of Deficiency informs the receiving taxpayer of their appeal rights with the United States Tax Court and states the cutoff date for filing an appeal. Although a IRS Notice of Deficiency is most often sent when there is a discrepancy between IRS calculations and the tax amount due shown a on a tax return, it can also be sent when no tax return has been filed.

A taxpayer must respond to a Notice of Deficiency within 90 days from the date it was mailed or within 150 days if it was mailed to an address outside of the United States. The taxpayer must either pay the assessed tax liability or to file an appeal with the United States Tax Court. Once the appeal deadline has passed, the appeal process is closed and the IRS has the authority to collect the tax amount owed. At this point, the IRS is likely to issue a Notice of Intent to Levy. The Notice of Intent to Levy allows a response time of 30 days (which is not required if the IRS determines that collection of the tax debt is in jeopardy), after which a taxpayer’s property can be seized to cover their tax debt. A taxpayer’s only option once the 90 day appeal deadline has passed is to pay the tax balance owed and apply for a refund, although even this action may not stop the collection process once it is set in motion!

Because tax law is complex and receiving an official communication from the IRS can be intimidating and sometimes confusing, it may be advisable for a taxpayer to enlist the services if a qualified tax professional before responding to a Notice of Deficiency. A CPA or Enrolled Agent will be able to determine whether the tax amount shown on the Notice of Deficiency is accurate and will be able to communicate effectively with the IRS on the taxpayer’s behalf.

If you have received an IRS Notice of Deficiency, a Notice of Intent to Levy or have been officially warned of an impending tax lien or wage garnishment, we can help you stop the immediate collection activity and work toward resolving your tax debt. Visit www.professionaltaxresolution.com to learn more about full range of tax settlement services. Contact us today at (949) 596-4143 or email us at info@protaxres.com to receive a free, no obligation consultation and get the tax relief you deserve.

Government Employees Have Delinquent Tax Balances

Posted on June 2, 2014 by Kursti Nakagawa

Delinquent Taxes and Government Employees

Government Employees Have Delinquent Tax Balances – Various government workers have been in the news recently for their delinquent taxes. One article reported that over 1100 IRS employees who owed back taxes and had other tax related problems had, in fact, received bonuses. Another recent report divulged that, as of September 2013, various federal government employees and government retirees owed over three million dollars in unpaid taxes. In a nutshell, it appears that government employees are no different than the general population of taxpayers. Some do not pay their tax bills.

A recent audit of the IRS revealed that over 1000 IRS employees who were in violation of one or more of the tax guidelines set by the very agency they work had received bonus pay in spite of their noncompliance. The Treasury General for Tax Administration reported that the IRS employees who had received bonus compensation had various tax violations including back tax balances, the underreporting of income and late tax payments. While the IRS is not currently required to withhold bonuses for tax law noncompliance, it has said that it will work toward changing this policy based on the recommendations of the recent audit. In a recent statement, IRS officials said they “recognize the need for proper personnel policies” and will “strive to protect the integrity of the tax system.”

Another recent report discussed the delinquent taxes owed by government employees in general. According to his study, members of Congress have a higher percentage of delinquent taxpayers than the IRS. While the Treasury Department, which includes the IRS, has a 1.2% rate of noncompliance, the percentages are 3.24% for Senators and 4.87% for members of the House of Representatives. Results of this same study showed that the departments with the highest noncompliance rates were the Department of Veterans’ Affairs and the Department of Housing and Urban Development with rates of 4.38% and 5.29 % respectively. Off the large governmental agencies, the worst offenders were the Smithsonian Institution, the Government Printing Office and the Court Services and Offender Services Agency, all with tax noncompliance rates in excess of six percent. According to the IRS data released in this recent study, approximately 3.3% of federal government employees and federal government retirees owe back taxes.

If you have a delinquent tax bill, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our tax settlement services, call us at 877.889.6527 or visit our website at www.professionaltaxresolution.com. Our experienced CPAs and Enrolled Agents have a thorough understanding of tax law together with the experience to know which tax settlement option will be the best fit for your specific tax delinquency.

Tax Break for Homeowners About to Expire

Posted on November 13, 2012 by Kursti Nakagawa

Tax Break Set to Expire for Homeowners

Time is running out on a tax break that is aiding troubled homeowners from paying thousands of dollars to the IRS.

The Mortgage Forgiveness Debt Relief Act of 2007 will need to get extended by Congress by the end of this year or many homeowners will owe the IRS money. These homeowners would have to begin paying income taxes on the portion of their mortgage that was forgiven due to a short sale, foreclosure, or principal reductions. For example if a person owes $150,000 on their home and it sells for a $100.000 in a foreclosure situation, the IRS could tax them on the remaining $50,000. Someone in the 25% tax bracket would pay $12,500 on the foreclosure. Short sales and principal reductions would also have similar taxes.

Real estate agents have stated that many people selling their homes this year in distress sales are very anxious to get rid of their homes by the end of the year in case the Debt Relief act does not get extended.

If the tax break does not get extended a large number of homeowners could be affected. The number of distressed home sales is staggering. Each month more than 50,000 homeowners go through a foreclosure. Short sales have also tripled over the past three years to about a half a million a year. Due to these numbers many agree that the current Debt Relief Act is a “no-brainer!”

However, some experts are skeptical that the exemption will get extended. They believe now that the election is over and with the holidays coming up that Congress will have very little legislation going forward by the end of this year. Meanwhile others disagree and believe that Congress WILL extend the act by the end of the year.

“Both parties, both houses of Congress agree it’s good policy and it needs to get to done,” said Jamie Gregory, chief lobbyist for the National Association of Realtors, which supports the extension. “The hold up is the process. I’m confident it will get done. I just don’t know how.”

Even if the Congress allows the exemption to run out this does not mean that all borrowers with a forgiven mortgage debt will be subject to pay the IRS. For example, if the debt is discharged in a bankruptcy, no tax is due. Also certain borrowers are protected in some states, such as California.

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. 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.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.