Income Tax May Be Delayed Due To Fiscal Cliff

Posted on January 3, 2013 by Kursti Nakagawa

Tax Refund Delay

The fiscal cliff has been the talk of the news for the last part of 2012. The nation did not go over the fiscal cliff, however due to the delays tax refund information is uncertain. Congress’ tardy action on the fiscal cliff tax provisions has caused problems for the Internal Revenue Service.

The Internal Revenue Service now has to program its system and issue tax forms based on the revised laws. The IRS has not announced when taxpayers can start filing their 2012 returns, which means refunds will probably be late. Filing usually begins in mid-January.

“The IRS is currently reviewing the details of this week’s tax legislation and assessing what impact it will have on this year’s filing season,” said the agency, adding it will issue additional guidance “soon.”

This year may be even more problematic since Congress did not act until New Year’s Day. The IRS has already published Form 1040 for 2012, but many lines are listed as “reserved.” The reserved lines are “placeholder’s” for several fiscal cliff provisions, said an IRS agency spokesperson. The IRS still has to put together an instruction booklet for filing out the tax forms. This is causing tax preparers to wait for further instruction.

This is not the first time the IRS has had to deal with such a delay. Two years ago, it took until mid-December for President Obama and lawmakers to reach an agreement on similar problems. In this case tax season was delayed until mid-February. That particular year 9 million taxpayers were affected.

If you have tax any questions or 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. 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.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.

IRS Tax Return System Is Not Able to Retire Yet….

Posted on November 26, 2012 by Kursti Nakagawa

IRS Not Ready to Reitre E-File System

The Internal Revenue Service is not ready to retire the legacy e-file system. The e-file system became operational nationwide in 1990 and transformed the way taxes were filed. The e-file has proven in its time to be win-win for everyone. The taxpayers get their refunds by as fast as 10 days. Or, they have payment options to file now and pay later. The e-file returns are also very accurate. They have an error rate of 1% compared to 20% for a paper return.

The next phase for the IRS filing system is the Modernized e-File (MeF) System. The MeF will send acknowledgments out in minutes opposed to 48 hours. The IRS had planned to replace the legacy e-file with the MeF after the 2012 filing season. However, there seems to be some reported problems with the MeF and they will need to be corrected before this new system can be implemented.

A first report of MeF found that the system has difficulty processing large volumes of tax returns for extended period of time. It is a concern that performance issues with the MeF may affect the systems reliability. The IRS does not want to develop a retirement plan for the legacy e-file until all the glitches in the MeF has been resolved.

“The Modernized e-File is a part of the initiative by the IRS to meet the needs of the taxpayers, reduce taxpayer burden, and broaden the use of electronic interaction.” Said Treasury Inspector General for Tax Administration, J. Russell George. “ However, due to problems we identified, it will be necessary to demonstrate the system’s ability to process all returns filed electronically for an entire season before the Legacy e-file system can be completely retired.”

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. 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.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.

Tax Break for Homeowners About to Expire

Posted on November 13, 2012 by Kursti Nakagawa

Tax Break Set to Expire for Homeowners

Time is running out on a tax break that is aiding troubled homeowners from paying thousands of dollars to the IRS.

The Mortgage Forgiveness Debt Relief Act of 2007 will need to get extended by Congress by the end of this year or many homeowners will owe the IRS money. These homeowners would have to begin paying income taxes on the portion of their mortgage that was forgiven due to a short sale, foreclosure, or principal reductions. For example if a person owes $150,000 on their home and it sells for a $100.000 in a foreclosure situation, the IRS could tax them on the remaining $50,000. Someone in the 25% tax bracket would pay $12,500 on the foreclosure. Short sales and principal reductions would also have similar taxes.

Real estate agents have stated that many people selling their homes this year in distress sales are very anxious to get rid of their homes by the end of the year in case the Debt Relief act does not get extended.

If the tax break does not get extended a large number of homeowners could be affected. The number of distressed home sales is staggering. Each month more than 50,000 homeowners go through a foreclosure. Short sales have also tripled over the past three years to about a half a million a year. Due to these numbers many agree that the current Debt Relief Act is a “no-brainer!”

However, some experts are skeptical that the exemption will get extended. They believe now that the election is over and with the holidays coming up that Congress will have very little legislation going forward by the end of this year. Meanwhile others disagree and believe that Congress WILL extend the act by the end of the year.

“Both parties, both houses of Congress agree it’s good policy and it needs to get to done,” said Jamie Gregory, chief lobbyist for the National Association of Realtors, which supports the extension. “The hold up is the process. I’m confident it will get done. I just don’t know how.”

Even if the Congress allows the exemption to run out this does not mean that all borrowers with a forgiven mortgage debt will be subject to pay the IRS. For example, if the debt is discharged in a bankruptcy, no tax is due. Also certain borrowers are protected in some states, such as California.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.

IRS Commmissioner to Step Down

Posted on October 29, 2012 by Kursti Nakagawa

Doug Shulman

The Internal Revenue Service (IRS) Commissioner Doug Shulman has announced officially his plans to step down the end of this term. Mr. Shulman is the 47^th commissioner to serve and he has been in office since March 24^th, 2008 and plans to step down on November 9^th, 2012. George W. Bush appointed Shulman to office. Commissioners generally serve one term and no commissioner has ever served longer than five years since the office was created by Congress by the Revenue act of 1862.

Shulman has held office during difficult times in this economy. According to Shulman, “The IRS team has made remarkable progress in the last few years during a challenging period. It has been an honor to serve the American people during this dynamic time.”

The IRS Commissioner is a role with many responsibilities and it includes the management of over 100,000 employees. The commissioners are nominated by the President and confirmed by the Senate. A new commissioner will not take his place until after the presidential and congressional elections. In the interim Deputy Commissioner for Services and Enforcement Steven T. Miller will serve as the acting IRS commissioner when Shulman steps down.

If you have any tax questions or tax debt you are unable to pay our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. 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.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527.

New Healthcare Changes for Small Businesses – IRS

Posted on October 4, 2012 by Kursti Nakagawa

New Healthcare Changes for Small Businesses

The Supreme Court recently settled a divided debate when it ruled that the Patient Protection and Affordable Care Act (PPACA) individual mandate is constitutional and that the “shared responsibility payment” is a tax. How will this affect you?

History

Beginning in 2014, the PPACA will require individuals to carry a minimum healthcare coverage for themselves and their dependents or they will have to pay a fee which is called a “shared responsibility payment.” Before the Supreme Court decision was made, the first definition stated the shared responsibility payment was a “penalty” for people who decided not to purchase health insurance under the required mandate. In this decision the Court decided that the mandate was constitutional because the payment was included in Congress’ immense power to tax. Therefore, the court decided that the required shared responsibility payment was indeed a tax.

How will this ruling affect you? If you have health insurance through a private provider or with Medicaid or Medicare, some unique groups, and individuals with low incomes will be exempt from the individual mandate. However, the Congressional Budget Office believes around 4 million U.S taxpayers will have to pay the mandate tax in 2014 when these provisions are executed. Most of these 4 million taxpayers are included in the 27 million small businesses in the United States. Due to the fact many small business owners are sometimes underinsured or uninsured. Therefore they will be a likely group that will be subject to the shared responsibility payment.

It seems that these added taxes could be quite substantial. The household income and family size will affect how much the taxpayer will owe. For example, when the mandate provision is fully implemented in 2016, the additional tax liability could be 2.5% of the family income or $695 for each uninsured adult, whichever is more, up to $12,500.

More on the Mandate Tax

Per the Supreme Court’s decision the shared responsibility payment will be a tax. Originally, the legislation labeled the individual mandate as a penalty. However, the Supreme Court did not want it to punishable by nature. However, one thing is certain: The IRS has the authority to assess and collect the tax.

It is still unknown how the IRS will administer the mandate tax. Usually the IRS sends notices to the taxpayers with unpaid balances. Then if the taxpayer does not pay the balance, the IRS transfers the account to collections, where they then can file liens and levies of wages, income, and certain financial accounts. However, it does seem the PPACA has given the IRS restricted authority on how it will collect the mandate tax. Right now, under the current legislation, the IRS cannot send unpaid mandate tax balances to collection for enforcement, or can it issue liens or levies. The IRS will give out notices and offset refunds in order to collect the tax.

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss you’re tax resolutions free of charge. For more information about our services, visit us today at www.professionalresolution.com. 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.

For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 877.889.6527 to receive a free, no obligation consultation.