Waiting for a Tax Refund?

Posted on February 19, 2014 by Kursti Nakagawa

Where is My Tax Refund?

Waiting for a Tax Refund? It is tax time and many taxpayers who have already submitted their 2013 tax returns are now anxiously awaiting a refund. If you are one of those individuals, the good news is that you can check the status of your refund using the Get Your Refund Status tab on the home page of the IRS website. This tool will give you an update on your refund status within four weeks from the time a paper return was mailed or within 24 hours after a return has been e-filed. You can also call the IRS for a refund update but phone updates take longer to become available. Refund information is only accessible by phone if it has been six weeks since the mailing of a paper return or at least 21 days from the date of an electronic filing.

The refund status tool on the IRS website will tell you one of the following three things about your tax refund: 1) Refund Received, 2) Refund Approved or 3) Refund Sent. Once the site says that a refund has been sent, it may take several weeks for the funds to arrive if the taxpayer has requested a debit card or a paper check. Direct deposits into bank accounts should take less than five days. It should be noted that tax returns with mathematical errors, missing information or incorrect information always take longer to process. This is also true when the returns involves special issues such as identity theft, fraud or duplicate claims for the same dependent, among other things.

The good news for taxpayers expecting a tax refund is that Congress recently voted to extend the debt ceiling with no strings attached until, March 15, 2015. This means that the government will have the necessary funds to pay all the refunds it owes though this tax season and most of the next one. (solidstonefabrics.com) Although the IRS does pay interest on any refunds that are not issued within 45 days of the filing of a return, there is no law that says refunds have to be paid within a certain time period. Interest payments aside, most taxpayers just want their refund money so the recent vote was very good news for all those who overpaid their tax bills in 2013.

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.

Tax Time – A Good Time to Resolve Back Tax Balances

Posted on February 13, 2014 by Kursti Nakagawa

Tax Time – A Good Time to Resolve Back Tax Balances

Tax Time – A Good Time to Resolve Back Tax Balances: Tax time is as good a time as any to resolve back taxes issues. Paying or settling back tax balances at the same time as filing current returns starts the new tax year off with a clean slate and avoids the escalating consequences that back tax balances can cause. The worst choice a taxpayer can make is to ignore outstanding tax liabilities and hope they will vanish. As always, the best course of action is to face the problem head on and pay the balance in full. If the necessary resources are lacking, as is often the case, there are numerous tax settlement options available. That being said, tax time is now and now is the best time to resolve back tax balances!

The consequences of ignoring back taxes escalate over time and can be severe. Penalties for failure to pay back taxes are assessed at a rate of 0.25% to 1% of the tax amount due for each month or partial that tax balances remain unpaid. These penalties continue to accumulate until they reach a maximum of 25% of the initial tax amount owed. In addition, since the IRS treats a back tax balance as a loan, they charge interest on the overdue amount at a rate that varies with the federal short term interest rate. If penalty and interest charges are not enough motivation to resolve back tax balances, the IRS or State Tax Agency may impose some type of enforced collection action. These aggressive collection activities include tax liens, tax levies and wage garnishments.

The best way to resolve an existing back tax liability is to pay the balance in full. If sufficient funds are not readily available, the taxpayer might consider putting the back tax amount on a credit card, withdrawing from a retirement account or taking out a bank loan. Short term extensions are available for taxpayers who will have the resources to pay their tax bill within 120 days. Additionally, there are numerous tax settlement options available for those who cannot make full payment either immediately or in the short term. These options include Installment Agreements, Partial Payment Installment Agreements and Offers in Compromise, among other things. Aside from these tax settlement options, penalty waivers are sometimes available for delinquent taxpayers who were unable to meet their tax obligations due to circumstances that were beyond their control.

The best course of action for a taxpayer who has a back tax balance may be to contact a certified tax professional for help in determining the best way to resolve the outstanding liability. Although numerous tax settlement alternatives are available, the qualifying criteria are specific and can be confusing. In addition the application procedures are complex and time consuming. That being said, it may take a professional with a thorough knowledge of the requirements of the various tax settlement alternatives to effectively maneuver the system.

Beware of IRS Penalties at Tax Time!

Posted on February 11, 2014 by Kursti Nakagawa

Beware of IRS Penalties at Tax Time!

Beware of IRS Penalties at Tax Time! Tax time is a good time for taxpayers to be reminded of some of the penalties that can be assessed by the IRS and State Tax Agencies for failure to comply with set deadlines for the filing of tax returns and the payment of tax amounts due. Since penalty amounts accumulate over time and are usually combined with interest charges on any outstanding tax balances, they can result in significant increases to the amounts owed to the collecting tax agencies.

Outlined below are some of the penalties that come into play at this time of year:

Penalty for a Bounced Check

The penalty for a disallowed check or money order made payable to the United States Treasury is 2% of the amount of the check for checks of $1,250 or more. If the amount of the check is under $1,250, the penalty is $25 or the full amount of the check, whichever is less. The penalty fees for disallowed payments cover electronic payments as well as paper checks.

Late Filing Penalty

The penalty for the late filing of a tax return is 5% of the unpaid tax balance for each month or partial month that the return is late up to a maximum penalty of 25 %. A minimum penalty of $100 or 100% of the tax due, whichever is less is imposed for any tax return that is more than 60 days overdue.

Late Payment Penalty

The penalty for failing to pay tax amounts due is assessed at a rate of 0.5% for each month or partial month that the tax balance remains unpaid after the filing deadline. This percentage is reduced to 0.25 % for any taxpayer who has entered into a valid installment agreement with the collecting tax agency. Taxpayers who have filed for a 6 month extension and have paid at least 90% of the tax amount due at the time the extension was filed are exempt from paying a late payment penalty provided they pay the balance of any taxes owed at the time the extended return is filed.

The assessment of a tax penalty must be officially communicated to the taxpayer by means of an IRS Letter, an IRS Notice or a similar type of written notification from one of the State Tax Agencies. Each written penalty notice must include an explanation of why the penalty is being assessed and how the amount of the penalty was calculated. Upon receiving an official notice informing you of the assessment of a tax penalty, the best course of action is always to address the issue immediately before tax balances accumulate beyond what they already are.

If you have received a penalty notice or have 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.

Foreign Banks Take Advantage of Tax Amnesty Offer

Posted on January 27, 2014 by Kursti Nakagawa

Foreign Banks Take Advantage of Tax Amnesty Offer

Foreign Banks Take Advantage of Tax Amnesty Offer: In its latest attempt to tackle the problem of offshore tax evasion, the United States Department of Justice offered Swiss banks that are not currently under criminal investigation the chance to apply for tax amnesty. Banks that chose to accept the offer were given until December 31^st to turn over information on any undeclared foreign accounts and to provide information as to how they helped United States citizens hide their foreign assets. A recent report indicated that over one third of the 300 banks that were extended this recent amnesty option have accepted the terms and agreed to cooperate.

Under the terms of this latest tax amnesty program, foreign banks must pay penalties equal to a certain percentage of the value of their undisclosed American accounts in order to avoid prosecution. This percentage is determined by when the undisclosed accounts were opened and is highest for those accounts opened after the 2009 prosecution of UBS. The fines range from 20 percent of the value of undisclosed assets for those accounts opened before August, 2008 up to 50 % for those opened after February, 2009. While the Swiss government is critical of these steeply escalating percentages, it has apparently encouraged banks to cooperate.

The crackdown on offshore tax evasion increased in intensity after the 2009 conviction of UBS, the largest Swiss bank, for hiding over $20 billion dollars in United States assets. As part of this conviction, UBS paid a penalty of over $700 million and turned over in excess of 4000 foreign accounts. In addition, 100 United States taxpayers and financial advisers were criminally prosecuted while over 30,000 others avoided prosecution by disclosing their offshore accounts and paying the back taxes and penalties associated with the disclosures. Since that time, the Unites States Department of Justice has allocated more and more resources to identifying offshore assets and penalizing those institutions and individuals who attempt to hide them. This latest tax amnesty offer is part of that ongoing effort.

If you have questions about the reporting of assets held in foreign accounts or about a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your situation free of charge. For more information about our services, call us today at 877.889.6527 or visit us at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax problems, we have a thorough understanding of both domestic and foreign tax law tax together with the experience to know how to apply that knowledge to your specific financial situation.

The Consequences of FBAR Noncompliance

Posted on November 19, 2013 by Kursti Nakagawa

FBAR Changes…

Things are changing as the consequences of the FBAR Noncompliance are becoming stricter. Up to this point, the sentencing of offshore tax evaders has been fairly lenient. Although judges must attempt to follow sentencing guidelines written to ensure consistent punishment for defendants convicted of similar crimes, they have been given considerable leeway. Within these guidelines, the judges in these cases have been weighing such factors as the amount of financial loss or gain involved, whether the tax evader has assumed responsibility for the crime and whether they have provided information that has helped to build a case against others. They have also taken into account the defendant’s age, health and previous contributions to society. The following high profile cases shed some light on what type of sentences have recently been handed out to individuals who have been found guilty of concealing foreign income and assets:

Richard Werdiger – Seller of Diamonds and Jewelry

The offense: Richard Werdiger concealed more that $7 million in various offshore accounts between 2000 and 2008. During this time, the accounts earned more than . (https://www.leankitchenco.com/) 3 million which left him with a back tax balance of $400,000 by the time he was prosecuted.

The sentence: Because Werdiger failed to qualify for the Limited Amnesty Program offered by the IRS, the judge rejected his leniency plea and sentenced him to a year and a day in prison. He was also assessed a $3.8 million dollar civil penalty and a $50,000 fine.

Michael Canale – Army Surgeon

The offense: Michael Canale inherited a UBS bank account in 2000. By subsequently filing false tax returns and taking unreported cash withdrawals with the assistance of a Swiss financial advisor, he avoided paying over $200,000 in taxes.

The sentence: In April of this year, a judge sentenced Canale to 6 months in prison although he could have been given as much as 30 months.

Michael Reiss – Breast Cancer Researcher

The offense: Michael Reiss failed to declare offshore bank accounts in addition to changing banks and filing false FBAR reprots to hide more than $2.6 million in offshore assets.

The sentence: Although Reiss could have been sentenced to up to 37 months in prison according to sentencing guidelines, he was only required to serve one day. In addition, he was given three years of probation and required to perform 30 hours per week of community service during this time.

At the time of this writing, Ty Warner, Creator of Beanie Babies, is awaiting sentencing on charges similar to those described above. On October 2^nd, Mr. Warner pleaded guilty to offshore tax evasion. The extent of his wrongdoing includes unlawfully sheltering over $100 million in various Swiss bank accounts, filing a false tax return in 2002, underreporting his income by over $24 million between 1999 and 2007 and failing to file a Report of Foreign Bank and Financial Accounts (FBAR). He currently owes over $5.6 million in back taxes together with a civil penalty of $53.6 million. Based on precedent, it will be interesting to see what sentence the judge hands down.

If you need FBAR services, including help with current FBAR reporting or the filing of delinquent FBAR reports, the CPAs, Enrolled Agents and Tax Attorneys at Professional Tax Resolution can provide you with the help you are looking for. Contact us today to ensure that you meet the current requirements for the reporting of your foreign assets and income. For more information about this or other tax settlement services, visit us at www.professionaltaxresolution.com or call us at 877.889.6527 or to receive a free, no obligation consultation.