Tax Debt May Result in Loss of Passport

Posted on February 29, 2016 by Kursti Nakagawa

One of the numerous bills passed by Congress toward the end of last year was the Fast Act (Fixing America’s Surface Transportation Act). Executed on December 5, 2015, the main focal points of the bill are improving the county’s transportation infrastructure, strengthening public transportation and improving highway safety. However, in addition to the Fast Act’s focus on these transportation related issues, it contains an important line item which allows the State Department to go after United States citizens who owe back taxes by interrupting their use of a passport. The bill allows the government to refuse to issue a passport, fail to renew a passport or revoke a current passport if a taxpayer owes back taxes in excess of a certain threshold amount. This provision is particularly significant because, for the first time, it allows the IRS to share information with the State Department.

The IRS has been aggressively trying to collect back taxes for the past several years. However, they have recently had to scale back on the number of employees devoted to tax collection in order to deal with such pressing issues such as tax fraud, identity theft and tax scams. In light of this employee shortage, the Fast Act takes a step in the direction of collecting back taxes by interfacing with the State Department. It declares that any United States taxpayer who owes $50,000 or more in taxes, interest and penalties is considered to be in “seriously delinquent debt.” Once this designation has been established, the bill allows the IRS to turn to the Secretary of State to deny a passport when one is about to be issued or renewed by such an individual. Because a passport is a strong representation of freedom for any U.S. citizen, the new bill makes a powerful statement about the government’s focus on collecting delinquent tax payments.

If you are a taxpayer who falls into delinquent taxpayer category described above, it may well be advisable for you to contact a competent tax settlement professional to investigate your tax settlement options. Among other alternatives, these options include an IRS Offer in Compromise or IRS Installment Agreement. While a traditional Installment Agreement simply makes payment of a tax debt more manageable by setting up a payment plan, both the Offer and Compromise and the Partial Payment Installment Agreement settle the debt for less than the full amount owed. An additional option is to request a Collection Due Process Hearing. Once a taxpayer and the IRS have agreed upon a method for paying the back tax balance, the Secretary of State will go through the motions of removing the hold on the taxpayer’s passport. Similar to the IRS revoking a lien or a levy, the Secretary of State will deem the taxpayer’s current passport valid or issue a release allowing a passport to be renewed or a new one to be issued.

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.

Trust Fund Recovery Penalty Averted!

Posted on January 25, 2016 by Kursti Nakagawa

Trust Fund Recovery Penalty Averted!

Professional Tax Resolution latest Success Story: Trust Fund Recovery and Penalty Averted. The owner of BM Corporation contacted our office shortly after receiving a subpoena from the IRS requesting all of their banking records. Unsure of how to respond to the notice and fearful of the potential consequences it might hold, they contacted Professional Tax Resolution for help. Our staff responded immediately by filing a Power of Attorney and contacting the IRS Revenue Officer. Within a matter of three weeks, we had submitted all of the company’s back payroll tax returns and completed the necessary business financial statements. In addition, our tax resolution specialists had negotiated a tax settlement agreement for payoff of Trust Fund monies which included an initial payment together with a payment plan for the remainder the back tax balance owed. All of this work was done prior to the IRS reviewing the client’s bank statements!

As frequently happens, BM Corporation had responded to a cash flow shortage by using payroll tax funds to cover the operating expenses of the business. It was this situation that resulted in them falling behind on their payroll tax obligations. Although they had planned to catch up when their financial situation improved, this had not yet happened at the time they received the IRS subpoena requesting their banking records. Because payroll taxes include amounts that have been withheld from an employee’s paycheck and are being held in trust by the employer until payroll tax payments are due, the IRS purses collection of these taxes very aggressively. Had Professional Tax Resolution not intervened in the case of BM Corporation, the company would likely have been assessed very quickly and heavily.

The tax settlement situation described above illustrates how experienced tax professionals offer a distinct advantage in dealing with the IRS. They not only know the consequences of unpaid tax balances, but they know to resolve them in the quickest and most effective way possible. In the case of BM Corporation, speedy intervention on the part of the tax specialists at Professional Tax Resolution almost certainly avoided an assessment of the Trust Fund Recovery Penalty which is equal to 100% of the back payroll tax balance owed. Not only was the penalty averted and a payment plan put in place, but it was all accomplished prior the IRS even reviewing company bank statements!

Back Tax Balance Reduced by 80%

Posted on August 12, 2015 by Kursti Nakagawa

Back Tax Balance Reduced by 80%

Mr. C was referred to Professional Tax Resolution by a friend who had previously used our services. Having failed to respond to a Notice of Intent to Audit for tax year 2005, he had recently received an IRS Notice informing him that he owed over 150k in back taxes. On top of this, the IRS had initiated enforced collection activities to collect the tax amounts owed. In desperate need of professional tax settlement help, he contacted our firm.

At one time, Mr. C had a flourishing real estate company with offices in three states and a high gross profit. However,once the economy stopped booming, so did Mr. C’s businesses. By the time he contacted our firm, he was barely meeting his monthly expenses, let alone having sufficient funds to pay a large tax debt. After reviewing his financial information, our tax professionals decided that Mr. C would qualify for an Offer in Compromise in spite of the fact there were some special circumstances that we knew would make his case a hard sell with the IRS. Undeterred, our team set to work preparing his most recent corporate and personal tax returns and submitting his Offer in Compromise packet.

As we expected, the IRS questioned many actions of the taxpayer and facts of the case. They stated that Mr. C did not qualify for an Offer in Compromise because he had dissipated 401k assets that would have paid the tax liability in full after he had incurred the tax debt. In addition, they noted that he owned two corporations that could be sold to pay off the full amount of the outstanding tax liability. In response to their first concern, our professionals were able to show that all of the monies withdrawn from the 410k had been put into an income producing asset which was necessary for Mr. (Zoloft) C’s survival. They then went on to address the second concern by producing two business valuations which showed that the value of the business was only equal to the value of the business assets which was not enough to pay off the tax debt. In fact, by not backing down and doing the necessary legwork, our professionals were able to show that final value of all of Mr. C’s assets was approximately 27k, the exact amount of his compromise offer!

After the IRS had verbally agreed to accept the 27k offer, the tax resolution specialist stated that he wanted a collateral agreement based on future annual income over 50k. This would mean that if Mr. C made over 50k in one year, the income in excess of that amount would be taxed at a higher rate to pay off the old tax liability. Our professionals advised Mr. C that signing this agreement would not be in his best interest and quickly submitted a response to the IRS stating that 50k was not a reasonable amount. We were able to show that the client’s cost of living was over 50k and that the IRS had figured the amount incorrectly according to the Internal Revenue Service Manual. After a careful review of our response, the IRS adjusted the collateral agreement to begin at 95K, making it very unlikely that Mr. C would ever be required to pay more than the negotiated Offer in Compromise amount.

Although some tax settlement cases are cut and dried, most have extenuating circumstances that make them more difficult to resolve as was the case with M. C. This makes it important for a delinquent taxpayer to choose a tax resolution team that has a proven track record of negotiating successfully with the IRS. Professional Tax Resolution has such a record. Our staff prides themselves in keeping the client’s best interest in mind and achieving the best tax settlement possible for their specific set of circumstances.

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.