IRS Archives - Page 20 of 26 - Professional Tax Resolution

Category Archives: IRS

Payment Installment Options for an IRS Offer in Compromise

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The IRS Offer in Compromise tax settlement option allows a taxpayer with an outstanding tax liability to settle the debt for less than the full amount owed. Although the Offer in Compromise has very specific acceptance criteria and may be difficult to obtain, it is a very attractive tax debt settlement option for those taxpayers who do qualify.

The IRS has made the Offer in Compromise a particularly attractive and popular tax settlement choice by offering three different payment plans. The flexibility makes this tax settlement choice attractive to taxpayers who have varying financial situations. Each of the payment options (outlined below) includes an initial payment to be followed by scheduled installment payments.

• The Lump Sum Cash Payment Plan requires an initial payment which must be equal to 20% of the Offer in Compromise tax settlement amount. The balance of the negotiated tax relief amount must be paid in five or fewer installments scheduled regularly from the date the compromise offer is accepted. (sapns2.com)

• The Short Term Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off within 24 months from the time the IRS receives the Offer in Compromise application.

• The Deferred Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off in more 24 months from the time the IRS receives the Offer in Compromise application but before the ten year statutory period for collection is up.

Hence, the IRS Offer in Compromise is not a one stop shop. The versatility of the available payment plan options accounts for some of its popularity and make it an attractive tax debt settlement choice for a wide range of taxpayers.

At Professional Tax Resolution we make sure that you take advantage of the best tax resolution option available. We carefully analyze the tax debt and financial situation of each of our clients and only recommend filing an Offer in Compromise when we believe it will be accepted. If we determine that you meet the candidacy requirements for an Offer in Compromise, we will work with you to prepare the offer and to submit all of the required documentation. We will also represent you before the IRS or State Tax Agency until the process is complete.

Click the “Learn More Link” or Call Toll-Free (877) 889-6527 to have one of our CPA’s provide a free, no obligation consultation regarding your eligibility for an Offer in Compromise.

Penalty Abatements and Penalty Waivers. What are they and how to qualify.

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Penalty Adjustments and Penalty Waivers

The assessment of penalties and interest are methods designed by the IRS and State Tax Agencies to encourage the timely filing and payment of taxes. These charges are imposed when a taxpayer fails to meet a filing deadline or fails to pay a tax amount when it is due. The assessment of a tax penalty is announced through an IRS Letter, an IRS Notice or a similar written notification from a State Tax Agency. The notice must include the name of the penalty, the reason the penalty is being assessed and an explanation of how the penalty amount has been calculated. The IRS Notice and the IRS Letter as well as notices issued by State Tax Agencies are computer generated so often errors occur. It is therefore important to verify that the reported penalty amount is correct before making payment or proceeding with any type of tax settlement procedure.

Since the accumulation of penalties and interest can represent a significant portion of an outstanding tax liability, obtaining a penalty waiver is often one of the most productive and efficient tax settlement options available. That being said, penalty waivers can be difficult to obtain. As with other tax settlement options, they are only granted under certain very specific conditions and they require strict documentation that those conditions have been met.

Normally, a penalty waver will be granted only under a condition that is called Reasonable Cause Relief.  In order meet the requirements of Reasonable Cause Relief, the taxpayer must show (1) that tax filing deadlines were not met or tax payments were not made as the result of some circumstance that was beyond their control and (2) that they took reasonable steps to counter the effects of the uncontrollable event and were still not able to file or pay their taxes.

The short list of events that may satisfy the requirements of Reasonable Cause Relief includes (1) a serious illness or death, (2) a fire, casualty or other natural disaster, (3) the inability to obtain tax records, (4) incorrect advice from a tax professional or (5) incorrect advice directly from the IRS.

In order to obtain a penalty waiver from either the IRS or a State Tax Agency, the taxpayer or their tax settlement representative must first submit a written request for the abatement. Following this, the taxpayer must meet the burden of proof that they acted in a responsible and prudent manner and still were unable to meet their tax obligations. The required burden of proof falls under the following three main headings:

  • The Uncontrollable Circumstances

–          What events happened?

–          When did the events occur?

–          Were the events such that they could not be controlled or anticipated?

–          How did the events prevent the taxpayer from filing or paying the taxes?

 

  • The Correlation Between the Uncontrollable Circumstances and the Late Filing or Payment

–          Did the taxpayer take steps to mitigate the effects of the uncontrollable circumstances?

–          How were other financial affairs handled during the time period in question?

–          Did the taxpayer pay creditors other than the IRS or State Tax Agency during the time period in question?

–          Is there a direct correlation between the uncontrollable circumstances and the late filing or payment of the taxes?

–          Did the taxpayer have a previous record of either late filings or late payments?

  • The Supporting Documentation

–          Is the provided documentation sufficient to show that the conditions for Reasonable Cause Relief have been met?

–          Was the documentation provided by an objective third party?

Since penalties are assessed for the purpose of enforcing compliance and creating fairness within the tax system, they are normally waived only when Reasonable Cause Relief can be documented according to the criteria described above. The procedure for obtaining an abatement of tax penalties is specific and complex and may require the assistance of a qualified tax settlement professional.

If you have been assessed penalties due to an existing tax debt, we can help you determine whether the assessed penalties are accurate and whether you meet the qualifications for a penalty waiver. Our experienced tax settlement professionals can also help you submit your penalty waiver request according to established IRS or State Tax Agency guidelines. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (949)-596-4143 or by email at info@protaxres.com to receive a free, no obligation consultation.

 

IRS Math Error Adjustments -The Debate and Your Rights

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A report from the Treasury Inspector General for Tax Administration published earlier this month gives an unfavorable evaluation of the timeliness and accuracy of IRS responses to taxpayer complaints about math adjustments. The IRS has the authority to adjust taxpayer returns for over 400 math error conditions. These conditions, which can be adjusted by the IRS without performing an audit, include arithmetic errors, missing documentation and missing or incorrect social security numbers, among other things. A taxpayer can accept or reject a math error adjustment once they have received an official IRS Notice informing them that one exists.

The complaint highlighted in the recent TIGTA report is that taxpayers who dispute math adjustments often experience delays in receiving a response form the IRS. Such delays either result in the taxpayer not receiving benefits to which they are entitled or a loss of revenue to the federal government, depending on how the appeal is decided. Since both of these results are negative to one of the parties involved, TIGTA has made recommendations to the IRS to remedy the situation. In response to the TIGTA suggestions, the IRS has agreed to make their responses to taxpayer math error disputes more thorough and accurate. They did not, however, agree to the other TIGTA requests which were to monitor the timeliness of their responses and to prioritize the responses related to earned income.

The most important thing to take away from this is that if you revieve an official notice from the IRS regarding a math error adjustment, you should not ignore it. The professional help of a qualified Certified Public Accountant to evaluate your options in dermining your responce to this notification is often well worth the investment.

Click the “Learn More Link” or Call (949) 596-4143 to have one of our CPA’s provide a Free IRS or State Tax Notice Review and Consultation.

Tax Liens – How to Avoid Your Information Being Published

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In order to encourage compliance in the payment of outstanding tax debts, the California Franchise Tax Board is authorized to publish a list of the 250 largest state tax delinquencies in excess of $100,000. The list only includes amounts for which official tax liens have been recorded. Since the list is a matter of public record, the Tax Board is required to provide a written notice to the taxpayer before publishing their name on the list. Once an official notice has been issued, the taxpayer’s name will be posted on the list if the tax debt has not been resolved within 30 days.
As with all other official correspondence from the IRS or any State Tax Agency, a notice such as the one described above should not be ignored. Tax agencies are the most powerful collection agencies in existence and publishing a list of delinquencies is just one method they use to enforce compliance. Since there are always steps that a taxpayer can take to resolve any tax debt issue, the worst possible course of action is to ignore the problem. In the case of the California Franchise Tax Board’s tax delinquency list, a taxpayer’s name will not be included provided they contact the Board in an attempt to resolve the tax debt within 30 days of receiving official notification of the impending publication of their name. The list will also not include the name of a taxpayer who has either initiated or completed a verifiable bankruptcy petition, entered into an installment agreement with the collecting agency or had their tax debt officially identified as “not collectible.”

 

Click the “Learn More Link” or Call (949) 596-4143 to have one of our CPA’s provide a Free IRS or State Tax Lien Notice Review and Consultation.

For Those With Tax Debt, The Economy Could Cause Even More Problems.

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The struggling economy has caused more taxpayers than ever to find themselves with and outstanding tax debt that they simply cannot pay. When accepting tax settlements one of the requirements of the IRS is typically that the taxpayers file and pay their taxes on time in the future. Most taxpayers get behind initially due to a lost job, an illness or some other unforeseen event. It can be very difficult for taxpayers struggling financially to stay current on their current taxes while settling those owed for prior years. Any increase in taxes now or in the future would certainly make a difficult problem much worse for taxpayers already struggling with a tax debt.

As most people know the struggling US economy will force legislators to make difficult decisions in the upcoming years. One of the most common points of discussion is the raising of taxes. (https://inboundrem.com/) Lawmakers continue to discuss on how to handle the nation’s debt and do something significant rather than simply patch the problem. It seems likely that all potential solutions will be brought to the table during the course of the negotiations. One issue, addressed by President Obama in his 2011 and 2012 budget proposals, is the current mortgage interest deduction which is one of the nations largest tax expenditures. According to many estimates, the mortgage interest deduction cost somewhere between $80 and $103 billion in 2010, and its value over the 10-year budget window is expected to exceed $1 trillion

Proponents of the mortgage interest deduction argue that it makes affordable to taxpayers who would otherwise not be able to own a home and encourages home ownership. Critics argue that the deduction tends to benefit higher income taxpayers who would have purchased a home without the deduction and that deduction artificially drives up home prices. However, this same argument is cited by its proponents, who observe that eliminating the deduction could further impact home prices in an already depressed market.

Any significant increase in taxes either through an increase in the tax rates or the disallowance of current deductions would make it more difficult for those already struggling to pay their income taxes. With the uncertainly regarding the US tax structure and the economy in general it is more important than ever for taxpayers with significant tax debt to explore their options to actually resolve the tax debt. With taxpayers and with the US providing temporary solution will only result in a more difficult problem to solve in the future.

Contact Us our professionals here for more for more information about customized tax relief assistance. With over 16 years of experience, we have the can help you select the tax relief option that will best meet the specific needs of your tax debt situation. Contact us today at (877-889-6527 or info@protaxres.com to receive a free, no obligation consultation.