Jeopardy Assessments Allow IRS to Freeze Assets

Posted on September 29, 2015 by Kursti Nakagawa

The recent tax troubles of Barcelona soccer star Neymar da Silva Santos serve to point out the very powerful nature of tax collection agencies. Earlier this month, a Brazilian judge froze almost $50 million in assets to prevent to Neymar from hiding funds that might be needed to cover a tax debt with the Brazilian government. The total amount of the freeze was apparently equal to 150% of the soccer star’s estimated tax debt and included, not only his personal assets, but also those of family members. Although this particular jeopardy assessment was initiated by the Brazilian counterpart of the IRS, we are reminded that our own tax collection agency is equally as powerful. When collection of an outstanding tax liability is in question, the IRS has the authority to freeze whatever assets are necessary in order to cover the debt, even without following normal assessment and collection procedures.

The IRS is given the authority to initiate a jeopardy assessment such as the one recently imposed by the Brazilian government if they determine that following normal collection procedures will place collection of the tax debt in jeopardy. In such a case, the IRS is allowed to immediately levy assets to cover payment of the tax liability without waiting the normal 30-day grace period after a Notice of Intent to Levy is issued. Once an assessment such as this is handed down, the back tax balance, together with any penalties and interest that have accumulated, become immediately due and payable. In the case of income taxes, such jeopardy assessments can even include termination of the current tax year or imposing an immediate deadline on collection of taxes from the previous year.

As would be expected, the issue of jeopardy assessments violating a taxpayer’s right to due process has been challenged in court numerous times. Although the courts normally back the IRS, a 2010 Supreme Court Ruling in the case of Unites States v. Clarke upheld the taxpayer’s right to challenge the authority of the IRS. In this case, Michael Clarke disputed an IRS summons for information, saying that it had been issued as a result of his refusal to cooperate with an IRS audit. The courts agreed that he had a right to question the agent since he had been able to show some evidence of an improper motive. While the ruling did not open the floodgates for the questioning of any IRS summons, neither did it provide the IRS with the blanket protection it had hoped for. In another case, Joe Francis, creator of the pornographic entertainment company, Girls Gone Wild, said that the IRS had violated his taxpayer rights when they issued a jeopardy assessment freezing assets in his Morgan Stanley and UBS accounts. In this case, the courts upheld the actions of the IRS, saying that they were well within their rights in using extreme measures to secure payment of the $23 million back tax balance owed by Francis at that time.

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 https://professionaltaxresolution.com/services/back-taxes-delinquent-returns/, 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 Debt Reduced by Filing Past Due Returns

Posted on September 8, 2015 by Kursti Nakagawa

Tax Debt Reduced Through Filing of Past Due Tax Returns

Sometimes resolving a back tax balance is as simple as filing past due tax returns. The case of Mr. P involved just that! When he contacted our office, he had not filed either his corporate tax returns or his personal income tax returns for the last 10 or 11 years. Unsure of how to proceed and fearful of the potential consequences of his negligence, he contacted the tax settlement specialists at Professional Tax Resolutions for advice and help. Our team informed Mr. P that it would be necessary to contact the government immediately in order to collect the specific details necessary to come up with an appropriate plan of action. Among other things, we needed to know exactly which tax returns had not been filed as well as what back tax balances were showing for each year. In addition, it was imperative that we obtain a list of the official tax documents that the government had on file for each year that tax returns had not been submitted.

Anxious to put his tax problems behind him, Mr. P was eager to get started on his case. Within a few days, our tax professionals had contacted the government, received the requested information and were ready with a plan of action. Once our client had compiled the accounting records for his corporation, we compared them to those we had already received from the IRS and began to prepare the corporate income tax returns. Concurrently, we prepared M. P’s personal income tax returns for all years where one had not been filed. After all was said and done, the corporation was set up on a payment plan with the IRS and the FTB balance was lowered to the amount of the franchise fee plus accumulated penalties and interest. In addition, the client’s personal back tax balance was reduced by 80% with both the federal and state tax agencies.

As is evident from reviewing the case of Mr. P, it is important to select a tax professional who has a thorough understanding of the specific back tax issues one is facing. In particular, when a business entity is involved, it is important to choose a tax specialist who understands business accounting and entity taxation as well as the effect business income has on the individual’s personal tax balances. The tax team at Professional Tax Resolution is well equipped to resolve both personal and business tax issues. When a business is involved, they understand the interconnectedness of personal and business taxes and realize that it is important to consider both in order to come up with the best possible plan of action.

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

Franchise Tax Board Assessment Stopped

Posted on August 26, 2015 by Kursti Nakagawa

Franchise Tax Board Assessment Stopped

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.

Pros & Cons of Outsourcing the Collection of Tax Debt

Posted on August 24, 2015 by Kursti Nakagawa

Pros and Cons of Outsourcing the Collection of Tax Debt

Pros & Cons of the Outsourcing of Collection of Tax Debt

Pros & Cons of Outsourcing the Collection of Tax Debt

The Senate Finance Committee has recently revived their discussion of outsourcing the collection of back taxes. According to certain estimates, turning the collection of delinquent taxes over to private collection agencies would save the government more than two billion dollars over a period of ten years. However, opponents of privatization maintain that this would not be the case. In addition to emphasizing the potential threat to taxpayer security, they point to attempts at outsourcing the collection process that have not worked particularly well in the past. Time will tell whether the Treasury Secretary, who currently has the authority to make such a switch, will give it another try.

Those who favor privatizing the collection of tax debt say that it will raise more revenue that it costs. While this did not happen in a previous attempt at outsourcing that was made between 2006 and 2009, proponents say that the powers that be have learned from their past mistakes.They say that turning IRS collections over to private collection agencies will generate extra revenue that The IRS can use to hire new employees. In addition, they point to the fact that removing the task of debt collection from the IRS will allow the understaffed agency to focus its human resources on other important tax matters that have suffered in recent years.

On the other side of the fence, opponents of outsourcing say privatizing the collection of tax debt will not work. The National Treasury Employees Union points to data from the previous attempt at outsourcing which shows that the IRS collected over 60% more in the first two years of the program than the private collection agencies did – $139 million compared to $56 million. Although the private companies did better at collecting from cases where the amount owed was not in dispute, they lacked the authority to collect in the more difficult cases. The Center for Effective Government maintains that private companies will never be as effective as the IRS at collecting back taxes. According their spokesperson. “Collecting back taxes is an inherently governmental function, something that the government is uniquely positioned to do.” The IRS is the only collection agency that can garnish wages, levy bank accounts, Social Security benefits and 401k plans, place tax liens on property and even seize assets, all without judicial approval! These powers indeed make it the most powerful collection agency in the county, a fact that opponents of outsourcing tax debt collection are quick to point out.

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.

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.