Tax Time! Time to File your Taxes!

Posted on January 31, 2013 by Kursti Nakagawa

Tax Time!

It’s that time of the year again! People need to start thinking about their taxes.

Wednesday, January 30^th marks the beginning of tax season for 2013. The IRS had originally planned for tax season to begin on January 22^nd, but the fiscal cliff debate pushed the start date back.

Everyone needs to start organizing and preparing to file their taxes. Generally you can expect your refund three weeks after the IRS receives your return. Last year, over 110 million taxpaying citizens received an average refund of $2,803 each.

However, there are certain taxpayers who will need to wait to file. Those taxpayers that are claiming either Lifetime Learning Credit or the American Opportunity Tax Credit, two well liked education credits, will have to wait until mid-February to file their returns, a delay which could affect approximately three million people.

Other filers who may need to wait to file their returns include those who claim general business credits and residential energy credits. These filers may have to wait until late February or March for their returns to be processed. The full list of Forms can be viewed on the IRS website.

Lastly, if you have been an unfortunate victim of identity theft, you may also have to wait for your refund. The IRS has had recent troubles involving identity theft and tax fraud. The victims of these crimes many have 180 day delays according to the Taxpayer Advocate Service.

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For more information about our tax debt resolution services visit us at www.professionaltaxresolution.com. Contact us by phone at 888-589-5175 to receive a free, no obligation consultation.

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.

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Help! What to Do if You Receive a Notice of Deficiency.

Posted on December 13, 2012 by Kursti Nakagawa

Help! What To Do If You Receive A Notice of Deficiency

A Notice of Deficiency is a formal written claim by an agency that you owe income taxes with interest and penalty dues. The Notice of Deficiency also explains that an assessment is being calculated in regard to your income taxes owed. A Notice of Deficiency is also referred to as a “ninety day letter”; because once you receive the letter you have 90 days to take action.

Most people react in fear when receive such a notice in the mail. They feel overwhelmed and are not sure how to act appropriately. Keep in mind that not responding to a Notice of Deficiency is the worst possible course of action. If a tax agency does not receive a timely response after issuing an official Tax Notice, they will indeed take action to collect the outstanding debt. During this time, interest and penalties will continue to accrue on the unpaid balance. Moreover, failure to resolve an outstanding tax debt can result in a variety of collection efforts including tax levies, tax liens and wage garnishments.

If you receive a Notice of Deficiency your first step should be to consult with a tax professional on the matter immediately. A tax professional can work with you to resolve such tax debt issues by correcting incomplete or incorrect tax filings or by evaluating and negotiating various settlement or payment options. Settlement options may include Offers in Compromise, Installment Agreements, or Penalty and Interest Waivers.

In some cases, the IRS may declare a taxpayer “currently not collectible” after they have received documentation that the person has no ability to pay the tax debt. If this determination has been made, all collection activities including garnishments and levies must be stopped. In cases similar to this, the help of a qualified Certified Public Accountant is well worth the investment. If you have received a Notice of Deficiency it is important to seek help from a tax expert immediately. To receive a free Notice Consultation with a licensed tax expert simply call us at 877.889.6572.

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.