Franchise Tax Board Assessment Stopped

Posted on August 26, 2015 by Kursti Nakagawa

Just one month after finalizing an Offer in Compromise with the Internal Revenue Service, Mr. C contacted Professional Tax Resolution with another tax settlement issue. Having successfully settled his federal income tax debt for less than 20% of the initial amount owed, he now needed our services to help with resolving an outstanding tax liability with the State of California. Just prior to contacting our firm for the second time, he had received and official notice from the California Franchise Tax Board informing him that he owed a back tax amount of 80K for tax year 2005. This amount included both penalties and interest that had been compounding over time.

Mr. C was both confused and upset when he received the tax delinquency notice from the California Franchise Tax Board. Having just settled his federal tax debt for this same year, he was taken by surprise when he received a notice from the state informing him that he still had an outstanding tax liability with them. A member of our staff quickly reviewed the notice and realized the assessment was based on the results of IRS audit. After ruling out the possibilities of fighting the audit based on proof of expenses or of submitting an Offer in Compromise proposal with the state, our staff decided to match the state’s assessment to the Internal Revenue Service transcripts. It was this match that provided the solution to Mr. C’s back tax issue with the California Franchise Tax Board.

We quickly came to realize the Franchise Tax Board was over-assessing Mr. C. Not only was their assessment based on a higher income then the IRS transcripts reported, but it incorrectly included taxes on income that was produced outside the state. In response, our professionals quickly prepared a letter of protest informing the Franchise Tax Board of the amount of income that was not produced in California and recalculating the tax amount based on the IRS transcripts. After one month and a close review of our protest, the Franchise Tax Board recalculated their assessment based on the correct income amount and came to the conclusion that our client did not owe any additional tax. The end result was that the case was settled and closed with the most favorable outcome possible. Not only did M. C walk away without paying one dime in back taxes, but the Franchise Tax Board actually owed him money!

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.

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.

Penalty Abatement Used to Resolve Tax Debt

Posted on July 30, 2015 by Kursti Nakagawa

Penalty Abatement Used to Resolve Tax Debt

Taxes are so frightening to many Americans that they choose a flight over fight response. Instead of facing their tax filing obligations and back tax issues head on, they choose to avoid them in hopes that they will go away. Unfortunately, this approach does not work in the long run. In addition to accumulating interest charges and late filing and payment penalties, a delinquent taxpayer will eventually be faced with some sort of enforced collection activity by the IRS. Such was the case with Ms. F who avoided filing tax returns for 10 years due to external financial issues. Eventually, the IRS contacted her and informed her that she owed a back tax balance of over 100k!

Frightened of the potential consequences of ignoring her tax obligations and unsure of how to respond to the IRS, Ms. F contacted Professional Tax Resolution for help. After a phone conversation and a face-to-face consultation, our tax professionals immediately began preparing and filing her back tax returns. Once this task had been completed, she owed the IRS $26,000. Although this was far less than the $100,000 that was on the books before the returns were filed, it was still exceeded her ability to pay.This being the case, Ms. F would have been in the same tax debt trap she was in before she contacted us if our tax specialists not continued to work on her behalf to bring the amount down.

Professional Tax Resolution approached the situation by requesting to have some tax penalties abated. Due to death and illness in her family, we realized that Ms. F might be a candidate for a penalty abatement which is a tax settlement option that provides for a reduction in tax penalties when a taxpayer meets certain qualifications. Since a large portion of any back tax balance is often the result of the accumulation of interest and penalties, applying for a penalty abatement can be one of the most productive forms of tax debt resolution. That being said, penalty abatements are only granted under certain conditions that difficult to document. However, our professionals know what is required and were successfully able to negotiate a penalty waiver that reduced Ms. F’s tax debt from $26,000 to $9,000, an amount she could afford to pay!

In addition to falling behind on her personal tax returns, Ms. F was also delinquent in filing the tax returns for her business. This eventually resulted in her corporation being listed as inactive with the Secretary of State and placed her business retirement plan at the risk of being levied. However, due the quick response on the part of the staff at Professional Tax Resolution, no collection activity took place and the retirement plan was left untouched. Once our tax resolution team had prepared and submitted all corporate income tax returns and the company was promptly reactivated with the Secretary of State.

The case of Ms. F and her business illustrate Professional Tax Resolution’s personalized approach to tax debt resolution. We are always focused on helping our clients with whatever unique financial situation they may present. Our professionals understand that it might not be an easy one or two fix situation and that clients may need a series smart tax decisions to help them resolve all of their back tax issues.

Tax Debt of $200k Settled for $1000!

Posted on July 22, 2015 by Kursti Nakagawa

Tax Debt of $200k Settled for $1000! Mr. W is a self-employed individual and the main provider for his family. As a member of the construction industry, his income fluctuates with the housing market which was in a downturn for an extended period of time. As a result, he had difficulty generating enough income to meet his minimum monthly expenses and was hit with one late payment notice after another. With all of his attention focused on keeping his family afloat, Mr. W did not file his tax returns for a number of years, thus acquiring a tax debt of over 200K. With a new edition to his family on the way and the IRS breathing down his neck, he was at loss as to what to do.

Faced with what he perceived as a desperate situation, Mr. W reached out to Professional Tax Resolution for help. During his initial phone consultation, our tax professionals were able to gather enough financial information to relieve some of his anxiety by explaining the available tax resolution options. Pleased with what he learned from this conversation, Mr. W scheduled a face to face appointment with a member of our tax resolution team. At this time, we were able to give him a full breakdown on how to resolve his back tax issues.

The IRS was taxing Mr. W based on his self-employment income without taking into account his business expenses. This naturally resulted in an extremely exaggerated tax liability. Although his business was putting out some very high income numbers, his personal net income was low due to high business expenses. This low income was the primary reason for his tight financial situation and the resulting debt accumulation.

Our tax professionals began the process of resolving Mr. W’s tax debt situation by filing all unfiled tax returns. Although this produced a much more accurate picture of his outstanding tax liability, it showed that he still owed the IRS more than 90K. Since this was an amount that far surpassed his ability to pay given his current income stream, we recommended that he follow up with an IRS Offer in Compromise.

Professional Tax Resolution gathered all of the information necessary to document his specific financial situation and to explain why he would be unable to pay the full amount of his back tax balance. After multiple communications and submitted documents, the IRS agreed to a negotiated Offer in Compromise amount of a mere $1,000!

Mr. W’s case was a financial worst case scenario. He had numerous unfiled tax returns as well late payments on previously filed returns. In addition, he lacked the money to pay the required amount once an accurate back tax balance had been obtained. Luckily, Professional Tax Resolution represented him throughout the entire ordeal. Not only did we reduce the amount he owed the IRS to less than 1% of the original back tax balance but we saved him time, allowing him to devote more energy to the business that would continue to earn him even more money! While not every case goes as smoothly as Mr. W’s, our professionals pledge to always go the extra mile for our clients and follow each case though until we achieve the best possible resolution.

Tax Debt Settled Using Multi-Step Resolution

Posted on March 29, 2015 by Kursti Nakagawa

Tax Debt Settled

Tax Debt Settled Using Multi-Step Tax Resolution Plan

A successful tax resolution plan often requires a creative approach that may include a variety of tax settlement methods used in various combinations. Such a plan often begins with an attempt to reduce the amount of the outstanding tax liability though the filing of back tax returns and amended returns. It may also involve an audit defense in the case where an audit has been requested. These initial tax resolution steps are followed by submitting an application for one of the various tax settlement options offered by the IRS or simply negotiating a payment plan to pay off the balance of back taxes owed.

The tax settlement case outlined below is one that involved multiple steps in order to achieve a successful resolution. Mr. C contacted Professional Tax Resolution in 2012 after receiving an IRS Notice of Intent to Audit informing him that his income tax returns for tax years 2009, 2010 and 2012 had been selected for further scrutiny. Our experienced professionals immediately went to work evaluating the audit request and collecting the documentation required to substantiate the specific items identified in the notice. Following a brief period of negotiation with the IRS, our tax team achieved a successful audit resolution, lowering his audit assessment by half. Although the audit resolution was a success, the back tax balance of 22k left at the end of the process was still more than Mr. C could afford to pay. He was in the financial industry and had been having a hard time making ends meet due to the difficult market.

Once he had filed his 2013 tax return, Mr. C again sat down with one of our tax resolution professionals. Before addressing his existing back tax balance, we advised him to fix his withholdings to ensure that he was withholding enough tax for the 2014 tax year. Following that, the Professional Tax Resolution team immediately started putting a multi-faceted tax settlement plan into action. Our first step was to resolve Mr. C’s back tax balance with the state by negotiating an affordable payment plan with the State Franchise Tax Board. Following that, we prepared and submitted and Offer in Compromise petition to resolve the balance of his outstanding tax liability with the IRS. The offer, which was received by the IRS on June 3, 2014, was accepted on September 9th after only one phone call. Mr. C, who could now see the light at the end of the tunnel, was thrilled at the overall outcome of the tax resolution process.

As was the case with Mr. C, the tax specialists at Professional Tax Resolution always devise a tax settlement plan the fits the specific needs of the client. They start the process at its source by making an accurate determination of the full amount of the back tax balance owed and follow this by devising a tax resolution plan that takes into account the amount of the back tax balance as well as the client’s ability if pay. Our tax professionals understand that the best solution is not the same for every person and customize each tax settlement plan to meet the needs of the customer.