Why You Should File Your Taxes

Posted on March 16, 2015 by Kursti Nakagawa

Why You Should File Your Taxes by April 15

Taxes Due 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 returns and failing to pay tax amounts owed can be significant. The failure-to-file penalty is assessed at a rate of 5% of the back tax balance for each month or partial month that a return is not filed up to a maximum of 25% of the outstanding tax liability shown on the return. A minimum penalty of either $100 or the entire amount of the back tax balance is assessed for any return that is not filed within 60 days of the filing deadline. In addition, a failure-to-pay penalty is assessed at a rate of 0.5% per month for each month or partial month following the filing deadline where a back tax balance remains unpaid. This rate is reduced it 0.25% if a taxpayer is making payments according to the terms of an official installment agreement and is excused altogether if a tax extension was filed and 90% of the back tax balance was paid on or before the original filing deadline. The failure-to-pay penalty is assessed for a maximum or 50 months, thus capping out at maximum of 25% of the original tax liability.

The lesson to be learned from all of this is that the filing of tax returns and the paying tax bills should be taken seriously. As is pointed out above, the financial consequences of not doing so can be significant. The failure-to-file penalty can be avoided by simply filing a tax return by the filing deadline even in the case where funds are not available to pay the tax amounts due. Outside of this, a taxpayer should avoid the compounding of penalties and interest by being proactive in coming up with a plan to pay any outstanding tax liability. To this end, the IRS is willing to work with delinquent taxpayers to come up with payment plans they can afford. Once a payment amount is determined based on the size of the back tax balance and the taxpayer’s financial situation, the taxpayer simply pays this monthly installment amount until the back tax balance is paid off. This is a far better solution than ignoring a tax bill and then having to pay the back taxes plus an additional 25% of the original tax amount owed.

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.

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.

IRS Installment Agreements

Posted on October 30, 2012 by Kursti Nakagawa

IRS Installment Agreements

If you owe back taxes to the IRS an installment agreement is one of the most common methods used to make payments to the IRS. A monthly general plan is usually the simplest way to set up an arrangement to pay off any taxes owed to the Internal Revenue Service. Even if you are filing your taxes and you cannot pay the entire amount owed, you can send an installment agreement form with your tax return. IRS installment agreements are usually easy to obtain when the amount owed is $25,000 or less. That being said the IRS has four types of installment agreements. Below is a description of each one:

Guaranteed Installment Agreement: This is definitely the simplest installment agreement. It is for someone who owes $10,000 or less to the IRS. However, one must fit the following criteria:

Have not filed late or paid late in the last five years.
All of your taxes are filed.
Your monthly installments will pay off your balance within 36 months.
You will file and pay your taxes on time from now on.

The biggest advantage of this type of installment agreement is that the IRS will not file a federal tax lien.

Streamlined Installment Agreement: This type of plan is designed for individuals who owe $25,000 or less to the IRS and it must be paid off in 60 months or less.

However, effective on March 7^th, 2012 taxpayers who owe $50,000 or less and can pay off the balance in 72 months or less are also included due to the expansion of the Fresh Start Initiative.

The biggest plus to the streamlined installment agreement is that a federal tax lien is not required. However, all your tax returns from must be filed, and you acknowledge to file your returns on time and as well pay your taxes on time in the future.

Partial Payment Agreement: This type of agreement works best when the guaranteed or streamlined installment agreements do not work for you. This is a type of payment arrangement that is based on what you can afford after a review of your living expenses. Unlike, the guaranteed or streamlined installment agreements, partial payment agreements can be set up to cover a longer repayment term. However, the IRS could file federal tax lien. Also, this type of agreement will need to be reevaluated every two years to see if you could pay more money. (https://store.spaceylon.com/)

“Non-Streamlined” Installment Agreements: If none of the above installment agreements work for you then you will need to negotiate your own installment agreement with the IRS. Usually this is the case if you owe $25,000 or more, if you need longer than 5 years to pay off the balance, or if you do not meet any of the criteria for a streamlined or guaranteed installment agreement.

This type of agreement is negotiated directly with the IRS agent and IRS manager. The IRS will most likely file a federal tax lien. You will also need to fill out a financial statement with additional financial information for the IRS to review.

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.

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.

IRS Back Tax Tips – Help with Late Tax Bills – Pay Your Tax Debt

Posted on January 13, 2012 by Kursti Nakagawa

Did you receive an IRS notice that you owe back taxes? While owing money can be a big worry, ignoring the problem will only make things worse. There are options to pay your tax debt, even if you can’t do it all at once.

If you need help with tax resolution because you owe back taxes, you can take advantage of different methods of payment or request that the payments be broken up into installments. Here are some tips:

A late tax bill from the IRS is expected to be paid promptly, including the taxes owed, penalties, and interest. You may want to get a loan so you can pay it in full to avoid making installment payments if you do not already have the money ready. A bank loan could have a lower interest rate than what you would have to pay in additional interest and penalties.

Tax bills can be paid via credit card. Your credit card could also have a lower interest rate than what you would have to pay in additional interest and penalties.

Tax bills may also be paid through checks, money orders, cash, cashier’s checks, or electronic fund transfers.

If you are unable to pay in full, you may be eligible to request an installment agreement between you and the IRS. The agreement would break up the amount due into monthly installments. Make sure that your required returns are all filed and your estimated tax payments are current.

You can request installment payments whether your tax bill is over or under $25,000. You should be informed within roughly 30 days if the IRS approves or denies your request, or if they need more information.

If you receive a late tax bill, our experienced professionals can help you resolve your back tax issues. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.