IRS Notice of Deficiency As a Wake-up Call

Posted on November 17, 2014 by Kursti Nakagawa

IRS Notice of Deficiency A Wake up Call Not to Ignore!

Let IRS Notice of Deficiency be a Wake-Up Call

Let IRS Notice of Deficiency be a Wake-Up Call – If you have received an IRS Notice of Deficiency, let it serve as an official wake-up call, informing you that you have a back tax issue that needs attention. Although a Notice of Deficiency is usually sent went the tax balance shown on a tax return is less that the amount the IRS believes you owe, it can sometimes be sent when no tax return has been filed. Either way, the Notice of Deficiency is an official communication from the IRS informing a taxpayer that they have a back tax balance. It is always sent by certified United States mail to the last known address of record for the taxpayer in question.

A Notice of Deficiency not only informs a taxpayer of the amount of their outstanding tax liability, but also provides an explanation of how the back tax amount was determined. It also itemizes any interest or penalties that have been assessed. In addition to providing this detailed account of amounts owed to the IRS, the Notice of Deficiency outlines the accepted process for responding to the communication. In general, the delinquent taxpayer has 90 days from the date the deficiency was mailed (150 days if mailed to an address outside of the United States) to either pay the assessed amount or contest it. Paying the back tax balance requires signing and dating the Consent to Assessment and Collection form, while contesting the assessment involves filing a petition with the United States Tax Court asking for a reconsideration of the back tax amount owed.

The worst possible response to receiving a Notice of Deficiency is no response. If a taxpayer does not sign the Consent to Assessment and Collection or file a petition with the United States Tax Court within the allotted 90 day time period, the IRS will resort to more aggressive collection techniques. Most often, they will issue a Notice of Intent to Levy. This notice requires a response and will automatically be followed by seizure of the delinquent taxpayer’s property if it is ignored for more than 30 days.

If you have received an IRS Notice of Deficiency, let the CPAs and Enrolled Agents at Professional Tax Resolution help you resolve your back tax issues. Our tax settlement professionals have a thorough understanding of tax law together with the experience to know which settlement options will be the best fit for your specific set of circumstances. Visit us today at www.professionaltaxresolution.com or call us at 877.889.6527 to receive a free, no obligation consultation.

Reality Stars Suffer the Consequences of Back Taxes

Posted on October 15, 2014 by Kursti Nakagawa

Reality Stars Suffer the Consequences of Owing Back Taxes

Reality Stars Suffer Consequences of Back Taxes

Reality Stars Suffer the Consequences of Back Taxes – The recent indictments of reality television stars Mike Sorrentino and Teresa and Joe Giudice highlight the importance of staying current with the IRS. All three, together with Mike’s brother Marc Sorrentino, were charged multiple offenses that included failing to file federal tax returns, misreporting income and underpaying income taxes. While these individuals operated under the radar for years, their attempts to avoid paying income taxes eventually caught up with them. They now face serious consequences that seem much more painful that paying the back tax balances they originally owed.

Jersey Shore star Mike Sorrentino and his older brother Marc, who was acting as his financial manager, were recently indicted for failing to pay a back tax balance on income of over nine million dollars earned over the last five years. Although both Mike and Marc claim that their accountant is to blame for their tax troubles, they have not been able to convince the tax collection authorities that this is the case. Among other things, the brothers have been charged with 1) grossly underreporting millions of dollars of income earned from promotional television appearances, 2) funneling business proceeds into personal bank accounts, 3) claiming various personal items such as expensive clothes and cars as business expenses and 4) failing to report cash payments made to various booking agencies. If convicted, the Sorrentino brothers could face multiple years in prison for evading the payment of taxes on income earned during the time period under scrutiny.

Occurring almost concurrently with the indictments of the Sorrentino brothers, Teresa and Joe Giudice, stars of another reality show, the Real Housewives of New Jersey, were convicted of similar charges of tax evasion together with charges of mail fraud, wire fraud and bankruptcy fraud. The couple plead guilty to submitting fake W-2 forms to obtain mortgages, using the phone to bilk cash from banks and falsely reporting income and assets in bankruptcy proceedings. In addition, Joe was convicted of failing to file federal income tax returns over a period of four years resulting in a back tax balance on income of nearly a million dollars. The couple recently negotiated a plea deal and will begin serving consecutive prison sentences.

The cases of both the Sorrentinos and the Guidices illustrate the negative consequences of ignoring tax deadlines and failing to pay back tax balances. The Internal Revenue Service is a very powerful collections agency and will resort to forceful collection activity if income taxes are not paid in a timely manner. When faced with a back tax balance, the worst choice a taxpayer can make is to ignore the problem and hope that it will go away. In light of increasingly sophisticated collection techniques, the possibility of this happening is very unlikely. The IRS will begin by assessing penalties and interest and will follow this by more aggressive techniques including tax liens, tax levies and wage garnishments. If none of these actions result in payment of the back tax balance, the taxpayer may face criminal prosecution for willfully evading the payment of income taxes.

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.

Know Your Tax Settlement Options

Posted on September 4, 2014 by Kursti Nakagawa

Know Your Tax Settlement Options

Know Your Tax Settlement Options – Concurrently with stepping up their efforts to identify taxpayers who owe back taxes, the IRS has been introducing new tax settlement programs to help these individuals resolve their tax debts. Because ignoring overdue taxes can result in such serious consequences as wage garnishments, tax liens and tax levies, in addition to the accrual of interest and penalties, delinquent taxpayers should be encouraged to resolve their back tax balances as quickly as possible. The worst choice a taxpayer can make is to ignore an outstanding tax liability and allow the consequences imposed by the Internal Revenue Service to escalate!

The following list outlines some of the alternatives available for resolving a back tax balance:

Paying the Balance in Full When sufficient liquid funds are not immediately available to pay the full balance of a tax debt, a delinquent taxpayer can often pay a the entire amount by applying for a bank loan, charging the outstanding tax balance to a credit card or taking money out of a retirement account.

Requesting an Extension A taxpayer who will have the necessary funds to pay a back tax balance within 120 days can request a short term administrative tax extension. Although interest will continued to be charged during the period of the extension, the IRS will not impose penalties or initiate enforced collection activities during this time.

Applying for a Penalty Waiver A Penalty Waiver is tax settlement option offered by the IRS for the purpose of reducing or eliminating previously assessed penalties. Penalty Waivers are normally granted only when a taxpayer is able to show that they were unable to fulfill their tax obligations due to circumstances beyond their control. (winandoffice.com)

Requesting an Installment Agreement An Installment Agreement is a tax settlement option that allows a delinquent taxpayer to pay off a back tax balance in installments when they are unable to pay the full amount at one time. Such an agreement is approved almost automatically if the total amount of the tax debt is less than $10,000 and the taxpayer is in good standing with the IRS. The length of the repayment period and the size of the installments are generally based on the total amount of the back tax balance together with the taxpayer’s financial situation.

Negotiating a Partial Payment Installment Agreement A Partial Payment Installment Agreement is a tax settlement option whereby the IRS agrees to accept partial payment of an outstanding tax liability. Because the collecting tax agency is agreeing to settle a tax debt for less than the full amount owed, the delinquent taxpayer is required to submit documentation substantiating the fact that they are financially unable to pay the full balance of the debt. The payment terms of a Partial Payment Installment Agreement are normally based on of the amount of the back tax balance in addition to the financial condition of the taxpayer requesting settlement.

Submitting an Offer in Compromise The Offer in Compromise is another tax settlement alternative that enables a delinquent taxpayer settle a tax debt for less than the full amount owed. Although it can be an excellent way to resolve a back tax balance, the qualification criteria are very specific and are strictly adhered to. In order for an Offer in Compromise to be accepted by the collecting tax agency, the delinquent taxpayer must submit documentation showing that they will be unable to pay the full balance of their tax debt within a reasonable amount of time.

Qualifying for Innocent Spouse Relief Innocent Spouse Relief is a tax resolution option that is available to a spouse who has incurred a tax liability on a joint tax return due to items improperly reported on the return by the other spouse without their knowledge. Such items could include the omission or inaccurate reporting of income or the misuse of tax credits or tax deductions, among other things.

If you have a back tax balance that you are unable to pay, our tax settlement professionals will assist you in resolving it. Visit us today at www.professionaltaxresolution.com for more information about our services. With over 50 combined years of experience in the business of resolving tax debt, we can help you determine which tax 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.

Is an Offer in Compromise Right for You?

Posted on August 20, 2014 by Kursti Nakagawa

Is an Offer in Compromise the Right Tax Settlement Option for You?

Is an Offer in Compromise the Right Tax Settlement Option for You?

An Offer in Compromise is a tax settlement option that allows a delinquent taxpayer to settle a back tax balance for less than the full amount owed. While it is an excellent way for a taxpayer who meets the IRS eligibility criteria to resolve a tax debt, not all taxpayers qualify. Because the acceptance criteria are specific and the application process is long and complicated, it is often best to consult a qualified tax professional for help with this tax settlement option.

What are the Offer in Compromise eligibility criteria?

A candidate for an IRS Offer in Compromise must meet one of the following three eligibility criteria: 1) doubt as to whether they are liable for the tax debt, 2) doubt as to whether they have the financial means to pay the full balance of the tax debt or 3) a determination by the IRS that an would be an effective means of resolving the tax debt.

What is the process for obtaining an Offer in Compromise?

Make an accurate determination of the back tax balance.

File all unfiled tax returns. Check previously filed returns for accuracy and file amended returns when necessary.

Determine and document eligibility.

Gather sufficient documentation to support one of the three Offer in Compromise eligibility criteria. This documentation may include tax returns, financial records, disability claims and medical records, among other things.

Submit the Offer in Compromise application.

Complete all necessary forms according to the set IRS guidelines and submit together with the necessary supporting documentation and required filing fees.

Supply additional information as requested.

Promptly submit any documentation requested by the IRS during the review period.

How long does it take to obtain an Offer in Compromise?

The IRS will begin to review an Offer in Compromise application as soon as it is submitted. The review process normally takes between six and twelve months but can take up to a maximum of two years. If the IRS does not officially accept or reject an Offer of Compromise petition within two years from the date it is submitted, they are mandated to accept the original offer.

What options are available for paying the balance of an Offer in Compromise?
Once on Offer in Compromise is accepted, three payment plans are available to pay off the settlement amount. The three plans, which differ as to the amount of the initial payment, the number of installment payments and the time period over which the installments are made, are designed to accommodate taxpayers with varying back tax balances and financial situations. The three available payment plans are as follows: 1) the Lump Sum Cash Payment, 2) the Short Term Periodic Payment and 3) the Deferred Periodic Payment. These three plans allow for an Offer in Compromise settlement amount to be paid in full in anywhere from five months to more than 25 months, but within the ten year statutory collection period.

If you have an unresolved tax debt, visit us today at www.professionaltaxresolution.com. With over 16 years of experience working with the IRS, our experienced professionals will help you determine which tax settlement option best meets your specific needs. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to learn more about our customized tax settlement services and to receive a free, no obligation consultation.

Do Not Ignore Mail from the IRS….

Posted on June 17, 2014 by Kursti Nakagawa

Ignoring Communication from the IRS Brings Serious Consequences

Why You Should Not Ignore Mail from the IRS – Although the issuance of an IRS Notice of Deficiency is usually the first step in the collection of an outstanding tax liability, ignoring it can have serious consequences. The Notice of Deficiency is an official communication from the IRS informing a taxpayer that the tax amount due shown on their tax return is less than the amount owed according to the calculations of the IRS. Because the IRS is allowed to collect a tax debt without proof that the debt exists, a taxpayer who receives an IRS Notice of Deficiency must either pay the tax liability shown on the notice or file a petition with the United States Tax Court contesting the tax amount owed. The burden of proof rests with the taxpayer.

A Notice of Deficiency is a formal written communication from the IRS. It is sent by certified or registered mail to a taxpayer’s last address of record for the purpose of announcing a tax deficiency. It must include an explanation of the deficiency together with a statement of the total amount of taxes, interest and penalties that have been assessed. In addition, the Notice of Deficiency informs the receiving taxpayer of their appeal rights with the United States Tax Court and states the cutoff date for filing an appeal. Although a IRS Notice of Deficiency is most often sent when there is a discrepancy between IRS calculations and the tax amount due shown a on a tax return, it can also be sent when no tax return has been filed.

A taxpayer must respond to a Notice of Deficiency within 90 days from the date it was mailed or within 150 days if it was mailed to an address outside of the United States. The taxpayer must either pay the assessed tax liability or to file an appeal with the United States Tax Court. Once the appeal deadline has passed, the appeal process is closed and the IRS has the authority to collect the tax amount owed. At this point, the IRS is likely to issue a Notice of Intent to Levy. The Notice of Intent to Levy allows a response time of 30 days (which is not required if the IRS determines that collection of the tax debt is in jeopardy), after which a taxpayer’s property can be seized to cover their tax debt. A taxpayer’s only option once the 90 day appeal deadline has passed is to pay the tax balance owed and apply for a refund, although even this action may not stop the collection process once it is set in motion!

Because tax law is complex and receiving an official communication from the IRS can be intimidating and sometimes confusing, it may be advisable for a taxpayer to enlist the services if a qualified tax professional before responding to a Notice of Deficiency. A CPA or Enrolled Agent will be able to determine whether the tax amount shown on the Notice of Deficiency is accurate and will be able to communicate effectively with the IRS on the taxpayer’s behalf.

If you have received an IRS Notice of Deficiency, a Notice of Intent to Levy or have been officially warned of an impending tax lien or wage garnishment, we can help you stop the immediate collection activity and work toward resolving your tax debt. Visit www.professionaltaxresolution.com to learn more about full range of tax settlement services. Contact us today at (949) 596-4143 or email us at info@protaxres.com to receive a free, no obligation consultation and get the tax relief you deserve.