Tax Debt Archives - Page 8 of 9 - Professional Tax Resolution

Category Archives: Tax Debt

IRS Debt – How did that happen? Now what do I do?

Posted on by

Incurring an IRS Debt

Most people who have IRS debt do not find themselves in that situation due to an unwillingness to pay their fair share of taxes. It is much more common that taxpayers find themselves owing the IRS either due to a mistake on a previously filed income tax return or some unavoidable circumstance such as a lost job, a decrease in earned income or an illness. While the initial IRS debt may have been the result of an unfortunate turn of events or a simple mistake or unreported item, it has often been compounded over time by the addition further taxes, penalties and interest. It is not uncommon for penalties and interest, which are often applied retroactively when the IRS or state tax agency makes an adjustment to a return from a prior year, to account for as much as 50% of an outstanding IRS debt balance. 

Resolving an IRS Debt

The first and most important thing that a taxpayer should do to resolve an IRS debt is to stop avoiding the issue. Taxpayers often think they can simply ignore their IRS debt because collection efforts begin mildly with letters simply stating the outstanding balance. Generally, the IRS has 10 years from the date a tax return is filed to collect an IRS debt. While collection efforts begin with passive techniques such as sending an IRS letter or IRS notice, as the 10 year collection period progresses, the methods get more aggressive. Collection attempts eventually lead to the possibility of filing a lax levy on bank accounts, wage garnishments or the filing of a tax lien. Any of these actions can have a drastic effect on a taxpayer’s credit rating and financial wellbeing. When faced with an IRS debt, a taxpayer may be best served by contacting a tax settlement professional to help resolve the issue.

How a Tax Debt Settlement Firm Can Help

The most obvious way to avoid an escalating IRS debt is to not incur the debt in the first place. While this may seem obvious, it is easier said than done. Mistakes are made and life events occur that are sometimes unavoidable. However once an IRS debt is incurred, it may be a good investment to enlist the help of a qualified professional to resolve the issue. Without professional help, individuals often find themselves overwhelmed by the barrage of letters from the IRS and confusion over how to proceed.

Why Professional Tax Resolution is a Good Choice

There are many different types of tax settlement firms and some, unfortunately, make promises they can’t keep and resort to unethical practices. For this reason, it important to research a potential tax resolution firm in order to select one that is reputable and has had a history of success settling IRS debt issues. To insure that a firm meets these qualifications, it is a good idea to verify their current licensure with the state certification agency and the Better Business Bureau. It is also advisable to review references if any are available. At Professional Tax Resolution, we encourage you to check our licenses, memberships and reviews. Our licensed CPAs and Enrolled Agents represent our clients before the IRS and State agency from start to finish. We work with our clients to prepare all un-filed tax returns, confirm and correct balances as reported by the IRS and provide our clients with the best tax settlement option available.

Haven’t filed your taxes in years? Don’t give up! Some Back Tax Tips.

Posted on by

Seeking Back Tax Help

Finding back tax help can be so confusing and stressful that some taxpayers simply give up. When attempting to resolve IRS issues, the help of a qualified professional can be invaluable. Yet finding the right person for the job can be a difficult task in itself.  Many types of companies advertise back tax help but some are made up of salespeople and marketing agents who know very little about negotiating with the IRS. Tax law is difficult to understand and the policies and procedures of the IRS are complex so it is important to find a tax professional that is not only honest and ethical but also experienced in providing back tax help. To insure that an individual meets these qualifications, it is a good idea to verify their current licensure with the state certification agency and the Better Business Bureau. A licensed tax professional that specializes in back tax help is required by their profession to meet stringent continuing education requirements in order to stay current with the never ending stream of changing tax regulations. Hiring a tax professional with verifiable credentials is really the only way that you can be sure of the qualifications of the professional you are hiring.

Let a Professional Do the Talking

Many taxpayers contact us only after they have made numerous attempts to resolve their back tax issues on their own.  Very often they seem surprised that the IRS was not very helpful in getting their back tax issue resolved.  While IRS employees are usually very knowledgeable, it is important to remember that it is the job of most IRS agents to collect the tax you owe. Also, the IRS is divided into many unconnected departments so there is a good chance that the person you are talking with does not even know how help you with your issue. At Professional Tax Resolution, we work with the IRS on a daily basis and are familiar with their policies and procedures.  We know how to communicate with them effectively and will negotiate with them on your behalf to resolve your back tax issues.

Avoid the Penalties and Interest

Many taxpayers are very slow to resolve you their back tax issues. If you are one of those people, it is important to remember that back tax balances continue to accrue penalties and interest until the balance is ether paid or a tax settlement is reached. It is not uncommon for penalties and interest to make up more than half of the total balance that a taxpayer owes.  An experienced tax professional will examine all of your tax settlement options including the waiver of penalties and interest and partial payment settlement options where the IRS accepts an amount that is significantly less than the amount actually owed.

Find the Right Professional

When you are in need of back tax help, probably the most important decision you will make is the selection of a tax professional.  At Professional Tax Resolution our CPAs and Enrolled Agents have many years of experience helping taxpayers resolve even the most complicated tax debt situations. Our process will always begin at the source of the problem and follow the solution through to a complete resolution. We encourage our customers to check our memberships, reviews and affiliations for verification of our credentials and our past successes.

Increased Funding for IRS Enforcement Means Avoiding the IRS Is Harder Than Ever

Posted on by

More Funding on the Way to Collect Outstanding Tax Debt

If you have an outstanding tax liability and have managed to stay under the IRS radar so far, your time may very well be running out. The Obama administration has submitted a $13.3 billion budget request for the Internal Revenue Service for fiscal year 2012, a $1.1 billion increase over the agency’s 2010 budget. The largest portion of this increase ($339 million) and almost half (approximately $6 billion) of the total 2012 budget will go toward enforcement.

Although recently the overall goal of the government has been to cut spending, the reasoning behind requesting increased funds for the IRS is that the extra expenditure will more than pay for itself. Because the IRS is the government’s primary source of revenue, analysts project that increasing the IRS budget will actually reduce the budget deficit by increasing tax enforcement revenues. Economists generally agree that every dollar invested in tax enforcement nets three or four times that in revenue. This would mean that the proposed 2012 budget increase for enforcement initiatives will net over a billion dollars in revenue.

Although enforcement is not the only focus of the proposed IRS budget for fiscal year 2012, all of the recommended changes are aimed at beefing up and streamlining the tax collection process in one way or another. The main budget items in the 2012 budget are outlined below.

  • Enforcement The budget proposes to strengthen enforcement efforts by addressing offshore tax evasion, improving tax debt collection processes and enforcing the information reporting requirements for businesses that were approved by Congress in 2008.
  • Preparer Oversight The budget allocates funds for increasing the examination requirements for tax preparers, enforcing preparer compliance with IRS rules and procedures and pursuing those preparers who engage in unethical conduct or fraudulent behavior.
  • Taxpayer Service The budget requests resources to improve the IRS website and provide new and improved online services. It also requests funds to add additional staff to improve the level of telephone service.
  • System Modernization The budget allocates funds for continuing the implementation of the taxpayer account database and modernizing electronic filing and payment options.

Although the funding requested by the proposed 2012 budget may meet some resistance in Congress, the handwriting is on the wall. With more and more resources bring allocated to the IRS for enforcement and modernization, it is going to become more and more difficult for taxpayers who have not filed or already have an outstanding tax debt to remain under the IRS radar. Since it is always better to approach the IRS before they approach you, the clear message in all this for taxpayers is that they should take whatever steps are necessary to become income tax compliant.

If you have an outstanding tax liability, we can help you resolve it. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years of experience, we have a thorough understanding of tax law together with the experience to know which tax settlement option will best fit with your specific set of circumstances. Contact us today at (949)-596-4143 or info@protaxres.com to receive a free, no obligation consultation.

Case In Point-Hiring A Qualified Professional To Handle Your Tax Settlement = A Good Investment

Posted on by

Although the IRS has numerous programs to assist taxpayers in settling outstanding tax debts, deciding which option to use is not always an easy task. Very specific acceptance criteria must be met in order for an application for tax relief to have any chance of being accepted. In addition, the process of filing the initial paperwork and documentation and following up by submitting the required responses to communication from the IRS can be lengthy and challenging. During the time a tax settlement application is under consideration, interest and penalties can accrue. If the settlement offer is then rejected, not only has there been a waste of time and energy on the part of the taxpayer, but the actual amount of the tax debt may have increased making the taxpayer’s financial situation worse.

Below is the detail of an interesting IRS Tax Court case in which the IRS Appeals Office failed to grant a taxpayer’s request for tax debt relief. The case is interesting because it highlights a number of the potential filing problems described in the preceding paragraph. Susan Fay Mostafa, the taxpayer in question, neglected to verify that she met the acceptance criteria for the type of tax debt assistance she was requesting. Her initial error was then compounded when she failed to file a formal request for tax relief on the correct IRS form and then did not respond to several official IRS letters and notices in an appropriate and timely manner.

The Case of Susan Fay Mostafa

• She received an IRS Notice of Deficiency for $1377 for a 1996 tax return that had not been filed. The notice stated that she was also liable for a 25% failure to file penalty.
• Although she submitted a Tax Court petition to challenge the deficiency notice, she later received an IRS notice of Intent to Levy.
• She then challenged the proposed levy by requesting a hearing with the IRS Appeals Office.
• At the same time, she wrote a check to the IRS for $701 and wrote on the check that endorsing it would mean accepting the 1996 tax return as Paid in Full.
• Once the amount of the check was credited to her account, she spoke with the appeals officer several times indicating that she considered her case closed since the IRS had cashed her check.
• In spite of the payment and the subsequent communication, the IRS Tax Court ruled against her.
• After considering all of the trial evidence, the Court of Appeals argued that she had not followed the specific IRS procedures for submitting an Offer in Compromise and had not received either an IRS letter or an IRS notice indicating that such an offer had been accepted.

The Tax Court case outlined above clearly shows that the assistance of a qualified tax settlement specialist may be helpful when submitting an application for tax debt assistance to the IRS. Each year many taxpayers who truly meet the qualification criteria for specific IRS tax relief programs have their applications rejected for one or more of the following reasons:

• failure to meet the acceptance criteria for a selected settlement option
• failure to file a request for assistance using the correct IRS form(s)
• failure to complete the required IRS form(s)correctly
• failure to provide all of the necessary supporting documentation
• failure to conform to the IRS time constraints for submitting forms and documentation
• failure to respond to formal IRS letters and notices in an appropriate and timely manner

Susan Fay Mostafa made all of the above errors when she tried to resolve her tax debt situation without the assistance of a qualified tax specialist. When the IRS Tax Court denied her appeal, she was no better off than she had been when she submitted her initial Tax Court petition. Had she enlisted the help of a tax professional, it would have been that person’s job to adequately document her inability to pay the full amount of her tax debt. Following that, it would have been the specialist’s responsibility to submit the request for relief with the accompanying documentation, to respond to follow-up communication from the IRS in an appropriate and timely manner and to advocate for Ms. Mostafa before the United States Tax Court.

The bottom line is not to try to handle a complex tax settlement case alone. Hire the right professional to help you achieve tax debt relief. Visit www.professinoaltaxresolution.com for more information about tax settlement options and contact us today at (949)-596-4143 or info@protaxres.com to receive a free, no obligation consultation.

Issues with tax debt? Check out the new Offer in Compromise guidelines.

Posted on by

The break you’re in need of may be on its way if you’re struggling with back taxes. The Internal Revenue Service Commissioner announced an initiative to help taxpayers get a fresh start with their tax liabilities on February 24, 2011. One possible way of reducing your past tax liabilities and avoiding IRS tax liens is by applying for an Offer in Compromise (OIC).

An Offer in Compromise is an agreement made between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Perhaps you were considering an Offer in Compromise but were unsure if you’d qualify. Maybe an offer you submitted was previously rejected. Under the new initiative, the IRS is now offering an expanded Streamlined Offer in Compromise Program.

The newly expanded OIC program will now allow taxpayers with annual income of up to $100K.The new program also doubles the allowable tax liability from $25K to $50K. Offers in Compromise are subject to IRS approval and they will analyze your income and assets.  Another perk of the expanded Streamlined OIC Program is the IRS will be making fewer requests for additional financial information. They will also offer the option to provide information by phone rather than by mail. Lastly, they will give more flexibility when considering a taxpayer’s ability to pay.  With the flexibility of the new program, more taxpayers will be able to get a “fresh start” in regards to their tax debts. However, the IRS still urges individuals to be aware of promoters who advertise that IRS debts can be settled for “Pennies on the dollar.” These promoters often charge high fees with little to no results.

Even if you feel you may not qualify for this tax settlement option, talk to one of our licensed tax experts at Professional Tax Resolution today. There are other tax settlement options, and we are glad to discuss them with you.