Author Archives: Kursti Nakagawa

Offer in Compromise Settled for 3% of Tax Due – $200,000 Reduced to $6,000!

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In January of 2013, Professional Tax Resolution received a call from Mr. E. who owed the IRS over $200,000 that he could not afford to pay. The majority of his tax debt came from the short sale of a home in a prior tax year, which resulted in a balance due of $165,000 for that one year alone.  After meeting with the client and going over some crucial financial and situational information, our staff determined that the client would be a good candidate for an IRS Offer in Compromise.  We immediately filed a Power of Attorney and began investigating the client’s tax history. The research showed that the client had filed all necessary tax returns and was tax compliant except for tax balance due. Within a few weeks, the staff gathered all of the information and supporting documentation necessary to compile an Offer in Compromise Application. The official application was submitted to the IRS by the middle of February. In June of 2013, an Offer in Compromise Specialist contacted our staff to request some additional supplemental documentation. As soon as this was received, the IRS was ready to accept the original Offer in Compromise petition as submitted.  The final settlement for 3% of the original tax owed was reached just five short months after the client first approached us for help!

Mr. E. is an insurance broker who has been struggling financially for the past six years and is barely making it by.  The client’s current financial status made it very unlikely that he would be able to pay the full amount of his tax debt within a reasonable amount of time, making him an ideal candidate for an IRS Offer in Compromise.  Outlined below are the primary components necessary to obtain a successful Offer in Compromise settlement as they pertain to this specific set of circumstances.

• The taxpayer meets one of the three eligibility criteria (doubt as to liability, doubt as to collectability, tax settlement would promote effective tax resolution) specified by the IRS.

Professional Tax resolution determined that this client would be unable to pay the balance of his outstanding tax liability and therefore met the doubt as to collectability standard for eligibility.

• The taxpayer’s eligibility can be adequately documented.

Professional Tax resolution submitted documentation showing that the client was basically insolvent and could not afford to pay the entire tax liability.

•The taxpayer was compliant.

Professional Tax Resolution filed an affidavit confirming that the taxpayer was compliant in filing all required federal income tax returns.

• The Offer in Compromise application and the necessary supporting documentation were submitted according to IRS guidelines.

Professional Tax Resolution has experience in submitting Offer in Compromise applications and adheres strictly to the established IRS policies and procedures.

While the Offer in Compromise is an effective tax settlement option for a very specific group of taxpayers such as the candidate whose case is described above, it definitely does not represent a blanket solution for anyone with an outstanding tax liability. The acceptance criteria are very explicit and, since many applications are submitted that do not meet the published IRS guidelines, the rejection rate is high. (https://store.spaceylon.com/) The Offer in Compromise is an excellent tax settlement option only under certain very specific conditions and when submitted using the very strict guidelines set forth by the IRS.

Visit www.profesionaltaxresolution.com for more information about customized tax relief assistance. With over 16 years of experience, we can help you select the tax relief option that will best meet the specific needs of your tax debt situation. Contact us today at (949) 242-9653 or info@protaxres.com to receive a free, no obligation consultation.

 

Top Earners Not to Retire?

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Retirement May Not Be Ahead....

The American dream used to be to get rich young and retire by the age of 40. However, the results of a recent survey by the Spectrem Group indicate that the current goal for many wealthy Americans is to work past the age of 70. This survey revealed that America’s uppermost wage earners do not plan on retiring until they are at least this old. A third of those surveyed who have annual earnings of $750,000 or more, claim they will not retire until after they turn 70. Of that group, 15% say they never plan to step down.  On the other hand, the same survey showed that only 6% of those making under $100,000 a year say they plan to work that long.

Another study from Barclays done in 2010 found that more than half of millionaires say they want to continue to work past the traditional age for retirement. Internationally, 60% of those with a net worth of $15 million or more say they plan to stay involved with work indefinitely. These results diverge from the popular idea that Americans retire later primarily because they cannot afford to stop working. On the contrary, the Barclays survey showed that those who are working the longest are the highest earners or the ones who can best afford to retire.

Many of the high wage earners surveyed by both Spectrem and Barclays are business owners and entrepreneurs. As a group, these individuals are far more likely to take risks in their finances and their life, and they are more likely to credit hard work for their success. It may be this mind-set that makes them want to keep working longer.

George Walper, President of the Spectrem Group, attributes two reasons to the late retirement of the rich. First, he believes that business owners feel they simply cannot leave their businesses for fear that their companies with fail without them. However, his research has shown that the main reason these entrepreneurs keep working is that they love their work and cannot imagine life without it. Walper added that even those top earners who say they are retired still contribute by serving on boards, giving advice to their companies or consulting by phone several hours a day. In addition, instead of working at the office, they may be doing business from a more comfortable spot like the beach.

If you have tax questions or 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 our website at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have the knowledge and experience necessary to know which tax settlement option will be the best fit for your specific set of circumstances.

 

Summer Tax Basics – Tax Tips to Keep You Ahead of the Game!

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Summertime Tax Tips!

It’s summertime and probably the last thing you want to think about is taxes! However, I am an organizer and I like to be prepared so at least I feel like I am ahead of the game…. Here are some easy and simple summer tax tips that will help you save money! Most people wait until December to start thinking about their taxes, but in actuality planning half way through the year is a better tax planning strategy.

First Things First

Have you filed your 2012 Tax Return (remember to file and take care of your taxes so back taxes do not incur)? If you were given an extension in April DO NOT procrastinate any longer. Finish your taxes NOW! If you wait until the last minute to meet the October 15th extension deadline, your return will be sloppy and rushed (the same thing goes for last minute April returns). You do not want to forget any tax deductions or make any filing errors.

Get Organized

I realize that now is the time to be outside in the sun. However, just take a couple minutes and organize your 2012 tax filing materials. Now go ahead and do the same thing for your 2013 taxes. It will make filing next year’s return seem painless!

It is very important that you keep some type of system for filing and organizing your tax information. It can be a desk drawer in your home office, an accordion file or a very large filing cabinet…. The important thing to remember is to choose something that works for you and stick with it. The system should make everything easy to find. Nice labels for things such as charitable deductions, medical bills, business expenses, etc. are recommended. Just remember to keep everything in place!

Keep Day Camp Receipts

If you have young children like I do, this tip is important! The IRS allows parents to claim a child’s day camp expenses the same way that they can claim the Child and Dependent Care Credit to help cover the day care costs for children while they are working. Many people do not realize this or forget to claim summer day camps. It is important to note that overnight camps do not qualify, only day camps.

Assess Your Estimated Taxes

Estimated tax payments are needed if you have income that isn’t subject to withholding. The IRS wants to know that you going to pay taxes on all of your income. To avoid a tax penalty, it is critical that you do not underpay your taxes. Summer is great time to recalculate your estimated tax situation in order to keep on track so there are no surprises!

If you have tax questions or 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

Celebrity Back Tax Problems and Other Summer Tax Fun!

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Back Taxes? Fraud? Summer Reading......

It is very common to read about a celebrity or affluent person who owes the IRS a large amount of money in back taxes.  Believe it or not, some people have even taunted the IRS on social media pages in regards to stealing and defrauding the government. Here are some hot stories in the news media this summer that are a good read:

First off, it seems Courtney Love has landed herself in the news again. It is not good publicity either! The singer reportedly owes the Internal Revenue Service more than $260,000 in unpaid back taxes. It has been reported that the IRS filed a tax lien on Courtney Love claiming that she needs to settle an outstanding balance of back taxes from 2009 to 2011. This is not the singer’s first time owing back taxes either. In 2009, she had to pay over $320,000 for a back tax bill from 2007. These are some pretty steep tax bills over the years. Luckily, her life has not been dull and she is coming out with her memoir this fall to help finance her back tax tab!

Another hot summer story concerns a Florida lady by the name of Rashia Wilson. Wilson named herself the Queen of IRS Tax Fraud and was recently sentenced to 21 years in prison after stealing millions from the IRS. According to court documents, Rashia Wilson constructed a plan were she used fake ID’s and stolen social security numbers to collect millions in fraudulent tax refunds.

Rashia grew up in poverty, but then after coming up with her plan and implementing it in 2010, she spent the government’s money lavishly. Rashia paid top dollar for high end automobiles, expensive jewelry and designer clothes. She even spent $30,000 on her daughter’s first birthday party. As if this extreme spending from money that was not even hers is not bad enough, she then flaunted the theft on her Facebook page by posting pictures of herself with bundles of stolen money. This was probably not her best move!

After a multi-agency investigation which involved the IRS, the Tampa Police Department, the US Postal Service and the Hillsborough County Sheriff’s Office, Wilson was arrested on numerous counts, including tax fraud. On a side note, Rashia also collected food stamps during this time period. The judge sentenced Rashia to 21 years in prison along with paying a steep restitution fee!

If you have tax questions or 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 https://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.

New Tax Laws and Same Sex Marriage Ruling

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New Tax Law After Same Sex Ruling

The Supreme Court recently declared the Defense of Marriage Act unconstitutional. This means that, in some states, same-sex couples who are legally married can now receive the same Social Security, retirement and health care benefits that have long been available to heterosexual couples.  The ruling could even lead to a check from Uncle Sam for some!  This article discusses the financial and tax implications of this new ruling for same-sex couples.

Gift Taxes and Estate Planning

Gift and estate taxes have been a core issue for many same-sex couples. Since there was previously no federal recognition of same- sex couples, members of these unions were not able to pass their assets on to their spouses upon their death without being taxed. Now some same sex couples will be able to share the same spousal estate benefits that straight couples have enjoyed. The new ruling also makes it possible for married same-sex couples to share assets without having to pay gift taxes. This has been a problem in the past when a same sex-couple shared a house and split mortgage payments. Same-sex couples may want to consult with their tax professionals to make sure their estates and trusts are updated to take advantage of any new estate or tax benefits provided by the new laws.

Health Care Benefits

One of the greatest benefits of the new legislation is that a member of a same-sex union can now be recognized on their partner’s health insurance plan without the large fees that were added in previous years. In addition, same-sex couples can now elect a variety of more affordable and flexible health care plans with better rates. Even if a couple is happy with their current health insurance arrangement and chooses not to change plans, they may be eligible to file amended tax returns to collect taxes that have been paid on benefits in prior years.

Income Taxes

Until recently, same-sex couples were not able to file joint tax returns and thus had larger tax bills than heterosexual couples. One couple said they paid an additional $5,000 in taxes because they could not legally marry. As a rule of thumb, married couples pay less in taxes than individuals filing separately. This is especially true when one person in a couple earns significantly more than the other. In addition, married couples filing joint tax returns realize other tax benefits in areas such as capital gains taxes, child care credits and a larger exclusion for the sale of a home. These tax benefits will now be available to some same-sex couples. Although the new Supreme Court ruling potentially offers many tax benefits, same-sex couples may want to consult with a tax professional to see how it affects their specific set of circumstances.

If you have tax questions or 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.