Government Employees Have Delinquent Tax Balances

Posted on June 2, 2014 by Kursti Nakagawa

Delinquent Taxes and Government Employees

Government Employees Have Delinquent Tax Balances – Various government workers have been in the news recently for their delinquent taxes. One article reported that over 1100 IRS employees who owed back taxes and had other tax related problems had, in fact, received bonuses. Another recent report divulged that, as of September 2013, various federal government employees and government retirees owed over three million dollars in unpaid taxes. In a nutshell, it appears that government employees are no different than the general population of taxpayers. Some do not pay their tax bills.

A recent audit of the IRS revealed that over 1000 IRS employees who were in violation of one or more of the tax guidelines set by the very agency they work had received bonus pay in spite of their noncompliance. The Treasury General for Tax Administration reported that the IRS employees who had received bonus compensation had various tax violations including back tax balances, the underreporting of income and late tax payments. While the IRS is not currently required to withhold bonuses for tax law noncompliance, it has said that it will work toward changing this policy based on the recommendations of the recent audit. In a recent statement, IRS officials said they “recognize the need for proper personnel policies” and will “strive to protect the integrity of the tax system.”

Another recent report discussed the delinquent taxes owed by government employees in general. According to his study, members of Congress have a higher percentage of delinquent taxpayers than the IRS. While the Treasury Department, which includes the IRS, has a 1.2% rate of noncompliance, the percentages are 3.24% for Senators and 4.87% for members of the House of Representatives. Results of this same study showed that the departments with the highest noncompliance rates were the Department of Veterans’ Affairs and the Department of Housing and Urban Development with rates of 4.38% and 5.29 % respectively. Off the large governmental agencies, the worst offenders were the Smithsonian Institution, the Government Printing Office and the Court Services and Offender Services Agency, all with tax noncompliance rates in excess of six percent. According to the IRS data released in this recent study, approximately 3.3% of federal government employees and federal government retirees owe back taxes.

If you have a delinquent tax bill, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our tax settlement services, call us at 877.889.6527 or visit our website at www.professionaltaxresolution.com. Our experienced CPAs and Enrolled Agents have a thorough understanding of tax law together with the experience to know which tax settlement option will be the best fit for your specific tax delinquency.

The Tax Debt Debate

Posted on May 22, 2014 by Kursti Nakagawa

The Tax Debt Debate

The Tax Debt Debate – One interesting provision of the Tax Extenders Bill that is currently stalled in the United States Senate is the privatization of tax debt collection activities. The Tax Extenders Bill, which is unlikely to be voted on again this month, contains a clause that suggests turning delinquent tax accounts over to private collection agencies. This idea, which has actually been tried before, is the subject of much debate. While proponents believe that private companies specializing in debt collection will be better equipped to collect outstanding tax liabilities, opponents believe that their tactics may be unfair, especially to those taxpayers who are unable to pay their tax debt.

The tax gap, which is the difference between the dollar amount of taxes owed to the IRS and the amount they actually collect, has always been there. In fact, the data shows that it has remained fairly constant over recent years when measured according to the taxpayer compliance rate. Two years ago, the IRS released data comparing the 2006 tax gap to that of 2001. Although the gross tax gap increased over the five year period, from $345 billion to $450 billion, most of that amount was due to an increase in total tax liabilities. The compliance rate remained fairly constant at about 83%. Amounts collected following enforced collection activities by the IRS increased that rate to approximately 86% for both years. The IRS report noted that the compliance rate was highest where there was third party reporting or withholding. As expected, the percentage was much lower in areas such as retail business income where there is little or no information reporting.

In spite of the fact that total dollar amount of the tax gap is significant, many believe that turning the collection of tax debt over to private collection agencies is not the answer. After analyzing tax debt collection activities by the IRS for 2013, National Taxpayer Advocate Nina Olsen released a statement saying that 79% of the delinquent taxes were owed by taxpayers with incomes below the poverty line. Ms. Olsen maintains that these tax debts are not collectible by any method. She further asserts that turning them over to private collections agencies might jeopardize taxpayer rights and still not achieve the intended result of increasing tax revenue. IRS Commissioner John Koskinen is also opposed to the privatized collection of tax debt but cites a different reason. He points out that the last time this method was tried, it did not accomplish its objective. While $98 billion in back taxes was collected by private agencies, it cost more than that amount to administer the collection program and pay the agencies for their efforts!

If you have an outstanding tax liability, contact out tax settlement professionals today to discuss your tax debt resolution options. For more information about our tax settlement services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527 for a free consultation. We resolve tax problems all day, every day and have helped many satisfied clients successfully resolve their tax debt issues.

Taxes Are Due – Better Late Than Never!

Posted on April 14, 2014 by Kursti Nakagawa

Tax Time – Better Late Than Never!

Taxes Are Due – Better Late Than Never: The old saying “Better late Than Never!” applies to the filing tax of returns just as it does to most other aspects of life. With the April 15^th tax deadline on the horizon, many taxpayers are rushing to file either a completed tax return or a request for an automatic six-month extension. Failure to do so will subject the delinquent taxpayer to late filing penalties that will begin to accumulate along with interest that will be charged on any overdue tax balances. Although late filing penalties can be abated in certain specific instances when there is a valid reason for filing late, the reasons for the delay must be well documented. Even when these conditions are met, the IRS does not grant this form of tax relief automatically.

According to IRS tax filing statistics, approximately 75% of those taxpayers who were expected to file a 2013 tax return had already filed a week before the filing deadline. Looking at these figures in another way, about one out of every five tax filers waits until the week leading up to April 15^th to submit their return. Most tax returns (about 90%) are filed electronically. Of approximately 135 million people who will file a 2013 tax return, almost 80 million will receive a refund, The average refund is expected to be approximately $2800. These statistics mean that the IRS will be refunding over $200 billion for Tax Year 2013, about $66 million of this amount through direct deposit.

Regardless of your current or projected filing status, the CPAs and Enrolled Agents at Professional Tax Resolution would like to wish you well on Tax Day 2014. Should you be one of those taxpayers who fail to meet tomorrow’s tax deadline, we are here to help you review your tax filing and tax settlement options and communicate with the IRS on your behalf. Happy filing!

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.

Celebrities Who Ignored Tax Deadlines

Posted on March 17, 2014 by Kursti Nakagawa

Celebrities Who Ignored Tax Deadlines

Celebrities who Ignored Tax Deadlines – Ignoring tax deadlines and failing to pay outstanding tax balances can have severe consequences. Interest and penalties accumulate over time and can amount to a significant financial burden. In addition, the IRS has the authority to use more aggressive collection techniques such as tax levies, tax liens and wage garnishments when outstanding tax balances are not paid in full. The following examples illustrate the consequences suffered by some well known individuals who ignored their tax responsibilities.

This celebrity was slapped with a $6.2 million tax lien.

Although actor Nicolas Cage earned over $40 million in 2009, the IRS slapped him with a $6.2 million tax lien in that same year. He was apparently spending more money than he earned on such luxury items as yachts, homes, art, jewelry and vintage cars. It has recently been reported that Cage is trying to repair his finances and pay his tax debt by selling some of his properties as well as an entire island in the Bahamas!

This celebrity was arrested for state income tax evasion.

In December of 2012, actor Stephen Baldwin, the youngest of the Baldwin brothers, was arrested for state income tax evasion. The charge was due to the fact that he owed the State of New York over $350,000 in back taxes. This past March, he pled guilty to felony charges and paid $100,000 of the amount he owed. He must pay the balance of his past due tax liability by the end of this month in order to avoid jail time.

This celebrity accumulated a back tax balance of over $400,000.

When actor Gary Busey filed for bankruptcy protection in December of 2012, he was able to discharge more than $50,000 in liabilities. However, because tax debt is not covered by bankruptcy protection, he was left with an outstanding tax debt of $451,000. Time will tell whether Busey will suffer legal consequences or be able to negotiate a tax settlement agreement with the IRS to pay his back tax bill.

This celebrity is over $10 million in debt, most of it due to back taxes.

When singer Dionne Warwick filed for bankruptcy protection this past March, she listed only $25,000 in assets and over $10 million dollars of debt. Since most of this debt is apparently due to back taxes which are not relieved with a bankruptcy petition, she still faces an uphill financial battle. However, she is currently living in Brazil and working to pay her tax debt. Since she has an earning capacity of over $20,000 a month, her situation may not be as dire as some others who have monumental tax liabilities.

This celebrity was hit with multiple tax liens.

The IRS has filed multiple tax liens against R&B singer Toni Braxton in an attempt to collect almost $400,000 in back taxes owed for tax years 2008 and 2009. Although Braxton has filed for bankruptcy protection twice in recent years, the filings did not eliminate her tax debt. To date, there is no report that Braxton has resolved her tax problem.

This celebrity owes more than $1.5 million in unpaid taxes.

A tax lien was originally filed against O.J. Simpson in 1999 in an attempt to collect more than $1.5 million in delinquent taxes. However, due to the fact that Simpson is currently serving a 33-year prison sentence in a California correctional facility, it is unlikely that he will be able to resolve his tax bill!

As the above examples illustrate, it is never a good idea to ignore your tax responsibilities. The IRS is a powerful collection agency and will take whatever steps are necessary steps to collect the money they are owed. As the above examples illustrate, the worst choice a delinquent taxpayer can make is to ignore outstanding tax liabilities and hope they will go away. When the necessary funds are not available to pay a tax balance in full, it is advisable for a taxpayer to contact the IRS and attempt to take advantage of one of the many tax settlement options they offer.

If you have a back tax balance that you are unable to pay, our tax settlement professionals can help you determine the best course of action to resolve it. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years of 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. Contact us by phone at (877)-889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

Tax Time – A Good Time to Resolve Back Tax Balances

Posted on February 13, 2014 by Kursti Nakagawa

Tax Time – A Good Time to Resolve Back Tax Balances

Tax Time – A Good Time to Resolve Back Tax Balances: Tax time is as good a time as any to resolve back taxes issues. Paying or settling back tax balances at the same time as filing current returns starts the new tax year off with a clean slate and avoids the escalating consequences that back tax balances can cause. The worst choice a taxpayer can make is to ignore outstanding tax liabilities and hope they will vanish. As always, the best course of action is to face the problem head on and pay the balance in full. If the necessary resources are lacking, as is often the case, there are numerous tax settlement options available. That being said, tax time is now and now is the best time to resolve back tax balances!

The consequences of ignoring back taxes escalate over time and can be severe. Penalties for failure to pay back taxes are assessed at a rate of 0.25% to 1% of the tax amount due for each month or partial that tax balances remain unpaid. These penalties continue to accumulate until they reach a maximum of 25% of the initial tax amount owed. In addition, since the IRS treats a back tax balance as a loan, they charge interest on the overdue amount at a rate that varies with the federal short term interest rate. If penalty and interest charges are not enough motivation to resolve back tax balances, the IRS or State Tax Agency may impose some type of enforced collection action. These aggressive collection activities include tax liens, tax levies and wage garnishments.

The best way to resolve an existing back tax liability is to pay the balance in full. If sufficient funds are not readily available, the taxpayer might consider putting the back tax amount on a credit card, withdrawing from a retirement account or taking out a bank loan. Short term extensions are available for taxpayers who will have the resources to pay their tax bill within 120 days. Additionally, there are numerous tax settlement options available for those who cannot make full payment either immediately or in the short term. These options include Installment Agreements, Partial Payment Installment Agreements and Offers in Compromise, among other things. Aside from these tax settlement options, penalty waivers are sometimes available for delinquent taxpayers who were unable to meet their tax obligations due to circumstances that were beyond their control.

The best course of action for a taxpayer who has a back tax balance may be to contact a certified tax professional for help in determining the best way to resolve the outstanding liability. Although numerous tax settlement alternatives are available, the qualifying criteria are specific and can be confusing. In addition the application procedures are complex and time consuming. That being said, it may take a professional with a thorough knowledge of the requirements of the various tax settlement alternatives to effectively maneuver the system.