Tax Archives - Page 21 of 36 - Professional Tax Resolution

Category Archives: Tax

Late Tax Return? What Happens Next

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It’s the day after taxes were due, April 18th, 2012. What do you do if you still haven’t filed your tax return?

The IRS has some guidelines for what happens with returns that are past due. If the IRS doesn’t hear from you and you don’t file a return:

  • The IRS will increase your taxes as they assess penalties and interest.
  • A substitute return will be filed for you from the IRS, based only on information they have from sources other than you. Therefore, you would not get any additional exemptions or deductions you could be entitled to and your tax liability could be overstated.
  • After the IRS assesses your taxes, the IRS will begin the collection process. They could place a levy, which is legal seizure of property to pay tax debt, on your wages or bank accounts. They could also file a federal tax lien, which is a claim used as security for a tax debt, against property you own.

While the IRS may have already filed a substitute return, you should still prepare and file your own return because the IRS can adjust your account for correctness. You can then take advantage of the allowed exemptions, credits, and deductions. To make sure your tax settlement makes the most of your deductions, it can be smart to consult a professional tax resolution specialist.

If you need help because you didn’t make the tax filing deadline or have an unresolved tax liability, our experienced tax resolution professionals can provide the tax settlement and tax preparation help you need. For more information about our tax preparation and tax settlement services, visit us today at professionaltaxresolution.com. Our staff has the knowledge and experience to help you file your late taxes in a timely manner.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

Refunds Down, Direct Deposit Up

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The IRS recently released statistics showing that while more taxpayers have filed earlier this year, the tax return refund amount they are getting back will be less on average and most likely received through direct deposit.

According to the IRS, 75.3 million Americans have already been sent their refunds as of March 30, 2012, compared to 75.2 million last year at the same date. While more taxpayers have filed early this year, the average refund has dropped from $2,922 in 2011 to $2,826 in 2012.

Last year, a payroll tax cut allowed workers to pay 2% less into Social Security and Medicare, which could partly explain the change. However, the total taxable income for these workers also increased.

More taxpayers are requesting direct deposit this year, 62.5 million versus 60.7 million. This means 88% of 2012 tax refunds have been deposited into taxpayers’ bank accounts compared to 86% last year. The average amount deposited also shows a drop, as the average refund was $3,120 in 2011 and is $3,006 in 2012.

If you still haven’t filed your taxes, the deadline is fast approaching. Because of a federal holiday and April 15th falling on a weekend, the due date for filing taxes this year is Tuesday, April 17th. If your procrastination is due to some confusion with the tax forms or because of a change in circumstances that makes your taxes different this year from last year, professional tax resolution may be the best option to ensure that you don’t make mistakes that could lead to an audit. (Klonopin)

If you need help meeting the tax filing deadline or have an unresolved tax liability, our experienced tax resolution professionals can provide the tax settlement and tax preparation help you need. For more information about our tax preparation and tax settlement services, visit us today at professionaltaxresolution.com. Our staff has the knowledge and experience necessary to help you file your taxes accurately and on time.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

IRS Collection Financial Standards

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Are you delinquent on your taxes and can’t afford to pay your tax debt? The IRS released updated Collection Financial Standards on April 2, 2012, to help with calculating delinquent tax repayment of federal taxes. These standards help to define a taxpayer’s ability to pay a tax liability.

Standards include the following four categories of allowable living expenses:

Food, clothing, and other items Food, apparel and services, housekeeping supplies, personal care products and services, and miscellaneous (either living expenses that are not included in the former categories, or expenses in the former categories that exceed the standards)

Out-of-pocket health care expenses In addition to what is paid for health insurance, this includes medical services, prescription drugs, and medical supplies (such as vision care items like glasses and contacts)

Housing and utilities Rent or mortgage, property taxes, insurance, interest, and utilities such as gas, electric, water, garbage collection, landline and cellular phone, internet, and cable; calculated as a local standard according county US Census, American Community Survey, and BLS data, also takes into account how many persons are in the household

Transportation Monthly loan or lease payments as well as operating costs including maintenance, repairs, insurance, fuel, registration, licenses, inspections, parking, and tolls; public transportation alone or in combination with vehicle ownership; calculated as a local standard

The six-year rule for repayment of tax liability allows for payment of living expenses exceeding the Collection Financial Standards and other expenses like minimum payments on student loans and credit cards, as long as the liability can be paid in full within six years. This includes paying off the penalties and interest.

If you need help with delinquent taxes or have an unresolved tax liability, our tax resolution professionals can provide the tax settlement help you need. Visit professionaltaxresolution.com for more information about our tax settlement services. Our staff has the experience and expertise necessary to know which tax settlement option will most effectively resolve your specific back tax issues.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

You Have to Pay Your Taxes

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What is the law regarding the payment of federal income taxes?
Although taxpayers are initially given the responsibility of determining the amount of tax they owe by completing and filing the appropriate tax returns, paying income taxes is not voluntary. The requirement to file an income tax return and pay income taxes is clearly stated in the Internal Revenue Code, which imposes a tax on the income of individuals and corporations as well as estates and trusts. Failure to file an income tax return and submit payment of taxes with the return can result in harsh civil and criminal penalties, including fines and even imprisonment.

What are frivolous tax arguments?
Frivolous tax arguments are a group of arguments that are made by taxpayers who oppose compliance with federal tax laws. These arguments indicate that paying federal income taxes is voluntary and that certain categories of individuals are exempt from paying income taxes for reasons that have no merit.

What are the most common types of frivolous tax arguments?
Although frivolous tax arguments can take many forms, they most commonly fall into one of the following categories:

  • Paying income tax is voluntary These arguments maintain that the filing of federal income tax returns and the paying of federal income tax is voluntary. They contend that existing laws impose no legal obligation to either pay taxes or file tax returns.
  • Certain forms of income are exempt from taxation These arguments assert that certain forms of income are exempt from taxation for a variety of bogus reasons. One of the common variations of this argument is that military retirement pay is excluded from income tax. Other groundless contentions maintain that income from foreign sources is not taxable or that wages and tips received for personal services are not subject to taxation.
  • Taxpayer is not a United States Citizen The most common form of this argument is given by an individual who asserts that they are relieved of an obligation to abide by federal tax laws because they have rejected United States citizenship in favor of state citizenship.
  • Collection of taxes violates a Constitutional Amendment These arguments assert that the collection of income taxes violates one or more of the amendments of the United States Constitution. Some citizens refuse to pay taxes on the basis of religious or moral grounds that they say are guaranteed by the First Amendment. Others maintain that the payment of income taxes is some form of servitude that is in violation of the Thirteenth Amendment. Another common form of this argument is that federal income taxes represent the confiscation of property, which is prohibited by the Fifth Amendment.

What are the penalties for using a frivolous tax argument?
 In order to deter taxpayers from wasting time and resources, the United States Tax Court imposes harsh penalties on individuals who attempt to avoid or delay paying income taxes through the use of groundless or frivolous arguments. In 2006, Congress passed the Tax Relief Health Care Act, which increased the maximum penalty imposed for submitting a frivolous tax return from $500 to $5,000. This amount was increased to $25,000 by an amendment passed in March 2007. In addition to increasing the penalty for submitting a frivolous tax return, this amendment included a list of 40 specific positions that were deemed frivolous by the United States Tax Court.

 

If you have failed to meet tax filing deadlines or have an unresolved tax liability, our experienced tax resolution professionals can provide you with the tax settlement help you need. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. The members of our staff have the knowledge and experience necessary to know which tax settlement option will most effectively resolve your specific back tax issues.  Contact us today at (877) 596-4143 or info@protaxres.com to receive a free, no obligation consultation. 

Expansion of the Tax Settlement Provisions of the Fresh Start Program

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The Federal Government recently announced a major expansion of its Fresh Start Program which was initiated last year to help taxpayers stuggling with tax debt. The recent changes supplement efforts that were already in place under the original Fresh Start Program to help individuals and businesses meet their tax obligations and reach tax settlements. Three major areas targeted by the recent Fresh Start expansion are penalty relief, Installment Agreements, and Offers in Compromise. The changes to these areas of tax relief are outlined below.

Penalty Relief

  • What is the failure-to-pay penalty? The failure-to-pay penalty is an amount assessed by the IRS on any tax amount owed that is not paid by the filing deadline. It is usually assessed at the rate of one half of one percent per month with a maximum assessment of 25%. The failure-to-pay penalty is charged in addition to interest on the tax amount owed, which is usually three percent per year.
  • What are the provisions of the expanded penalty relief initiative? The expanded penalty relief initiative grants a six month grace period on failure-to-file penalties for two specific categories of taxpayers provided all tax amounts, penalties, and interest are paid in full by October 15, 2012. The groups of taxpayers covered by this provision are workers who were unemployed for 30 consecutive days at any time during 2011 up until the April 17th filing deadline and self-employed individuals who experienced a decrease in income of 25% or more due to the downturn in the economy.
  • What are the restrictions on the expanded penalty relief initiative? In order to be eligible for expanded penalty relief, a taxpayer who is married filing jointly must not have an income in excess of $200,000 and must not have a tax debt greater than $50,000. The income of a taxpayer who is filing as single or head of household must not exceed $100,000.

Installment Agreements

  • What is an Installment Agreement? An Installment Agreement allows a taxpayer to pay the balance of a tax amount due in installments rather than paying the entire balance of the tax debt by the due date. While interest continues to accrue until the balance of the tax debt is paid in full, penalties are generally reduced during the payment period.
  • What are the provisions of the expanded Installment Agreement initiative? The expanded Installment Agreement initiative reduces taxpayer burden by easing the restrictions placed on qualifying for a streamlined Installment Agreement. The streamlined Installment Agreement has the taxpayer advantage of not requiring a financial statement. Under the provisions of the expanded Fresh Start tax settlement initiative, the maximum tax debt allowable for a streamlined Installment Agreement is raised from $25,000 to $50,000, and the maximum term of the payment period is extended from 60 months to 72 months.

Offers in Compromise

  • What is an Offer in Compromise? An Offer in Compromise is a tax settlement option that allows a taxpayer to settle a tax debt for less than the full amount owed.
  • What are the provisions of the expanded Offer in Compromise initiative? The guidelines outlined by the expanded Offer in Compromise initiative make this tax settlement option available to a much larger group of taxpayers. Taxpayers with an annual income of up to $100,000 can now qualify for an Offer in Compromise. In addition, the maximum tax debt ceiling allowed for qualification has been raised from $25,000 to $50,000.
  • What are the restrictions on the expanded Offer in Compromise initiative? While the recent expansion of the Fresh Start Program makes the Offer in Compromise tax settlement option available to a larger group of taxpayers, the IRS will generally not accept an Offer in Compromise if they believe the entire amount of the tax debt can be collected.

If you have an outstanding tax debt, we can help you determine whether you qualify for tax relief under the provisions of the Fresh Start Program. Following that determination, our experienced tax settlement professionals can help you submit your tax settlement request according to established IRS guidelines. For more information about our tax settlement services, visit us today at professionaltaxresolution.com. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.