Back Tax Balance Reduced by 80%

Posted on August 12, 2015 by Kursti Nakagawa

Mr. C was referred to Professional Tax Resolution by a friend who had previously used our services. Having failed to respond to a Notice of Intent to Audit for tax year 2005, he had recently received an IRS Notice informing him that he owed over 150k in back taxes. On top of this, the IRS had initiated enforced collection activities to collect the tax amounts owed. In desperate need of professional tax settlement help, he contacted our firm.

At one time, Mr. C had a flourishing real estate company with offices in three states and a high gross profit. However,once the economy stopped booming, so did Mr. C’s businesses. By the time he contacted our firm, he was barely meeting his monthly expenses, let alone having sufficient funds to pay a large tax debt. After reviewing his financial information, our tax professionals decided that Mr. C would qualify for an Offer in Compromise in spite of the fact there were some special circumstances that we knew would make his case a hard sell with the IRS. Undeterred, our team set to work preparing his most recent corporate and personal tax returns and submitting his Offer in Compromise packet.

As we expected, the IRS questioned many actions of the taxpayer and facts of the case. They stated that Mr. C did not qualify for an Offer in Compromise because he had dissipated 401k assets that would have paid the tax liability in full after he had incurred the tax debt. In addition, they noted that he owned two corporations that could be sold to pay off the full amount of the outstanding tax liability. In response to their first concern, our professionals were able to show that all of the monies withdrawn from the 410k had been put into an income producing asset which was necessary for Mr. (Zoloft) C’s survival. They then went on to address the second concern by producing two business valuations which showed that the value of the business was only equal to the value of the business assets which was not enough to pay off the tax debt. In fact, by not backing down and doing the necessary legwork, our professionals were able to show that final value of all of Mr. C’s assets was approximately 27k, the exact amount of his compromise offer!

After the IRS had verbally agreed to accept the 27k offer, the tax resolution specialist stated that he wanted a collateral agreement based on future annual income over 50k. This would mean that if Mr. C made over 50k in one year, the income in excess of that amount would be taxed at a higher rate to pay off the old tax liability. Our professionals advised Mr. C that signing this agreement would not be in his best interest and quickly submitted a response to the IRS stating that 50k was not a reasonable amount. We were able to show that the client’s cost of living was over 50k and that the IRS had figured the amount incorrectly according to the Internal Revenue Service Manual. After a careful review of our response, the IRS adjusted the collateral agreement to begin at 95K, making it very unlikely that Mr. C would ever be required to pay more than the negotiated Offer in Compromise amount.

Although some tax settlement cases are cut and dried, most have extenuating circumstances that make them more difficult to resolve as was the case with M. C. This makes it important for a delinquent taxpayer to choose a tax resolution team that has a proven track record of negotiating successfully with the IRS. Professional Tax Resolution has such a record. Our staff prides themselves in keeping the client’s best interest in mind and achieving the best tax settlement possible for their specific set of circumstances.

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.

Penalty Abatement Used to Resolve Tax Debt

Posted on July 30, 2015 by Kursti Nakagawa

Penalty Abatement Used to Resolve Tax Debt

Taxes are so frightening to many Americans that they choose a flight over fight response. Instead of facing their tax filing obligations and back tax issues head on, they choose to avoid them in hopes that they will go away. Unfortunately, this approach does not work in the long run. In addition to accumulating interest charges and late filing and payment penalties, a delinquent taxpayer will eventually be faced with some sort of enforced collection activity by the IRS. Such was the case with Ms. F who avoided filing tax returns for 10 years due to external financial issues. Eventually, the IRS contacted her and informed her that she owed a back tax balance of over 100k!

Frightened of the potential consequences of ignoring her tax obligations and unsure of how to respond to the IRS, Ms. F contacted Professional Tax Resolution for help. After a phone conversation and a face-to-face consultation, our tax professionals immediately began preparing and filing her back tax returns. Once this task had been completed, she owed the IRS $26,000. Although this was far less than the $100,000 that was on the books before the returns were filed, it was still exceeded her ability to pay.This being the case, Ms. F would have been in the same tax debt trap she was in before she contacted us if our tax specialists not continued to work on her behalf to bring the amount down.

Professional Tax Resolution approached the situation by requesting to have some tax penalties abated. Due to death and illness in her family, we realized that Ms. F might be a candidate for a penalty abatement which is a tax settlement option that provides for a reduction in tax penalties when a taxpayer meets certain qualifications. Since a large portion of any back tax balance is often the result of the accumulation of interest and penalties, applying for a penalty abatement can be one of the most productive forms of tax debt resolution. That being said, penalty abatements are only granted under certain conditions that difficult to document. However, our professionals know what is required and were successfully able to negotiate a penalty waiver that reduced Ms. F’s tax debt from $26,000 to $9,000, an amount she could afford to pay!

In addition to falling behind on her personal tax returns, Ms. F was also delinquent in filing the tax returns for her business. This eventually resulted in her corporation being listed as inactive with the Secretary of State and placed her business retirement plan at the risk of being levied. However, due the quick response on the part of the staff at Professional Tax Resolution, no collection activity took place and the retirement plan was left untouched. Once our tax resolution team had prepared and submitted all corporate income tax returns and the company was promptly reactivated with the Secretary of State.

The case of Ms. F and her business illustrate Professional Tax Resolution’s personalized approach to tax debt resolution. We are always focused on helping our clients with whatever unique financial situation they may present. Our professionals understand that it might not be an easy one or two fix situation and that clients may need a series smart tax decisions to help them resolve all of their back tax issues.

Tax Debt of $200k Settled for $1000!

Posted on July 22, 2015 by Kursti Nakagawa

Tax Debt of $200k Settled for $1000! Mr. W is a self-employed individual and the main provider for his family. As a member of the construction industry, his income fluctuates with the housing market which was in a downturn for an extended period of time. As a result, he had difficulty generating enough income to meet his minimum monthly expenses and was hit with one late payment notice after another. With all of his attention focused on keeping his family afloat, Mr. W did not file his tax returns for a number of years, thus acquiring a tax debt of over 200K. With a new edition to his family on the way and the IRS breathing down his neck, he was at loss as to what to do.

Faced with what he perceived as a desperate situation, Mr. W reached out to Professional Tax Resolution for help. During his initial phone consultation, our tax professionals were able to gather enough financial information to relieve some of his anxiety by explaining the available tax resolution options. Pleased with what he learned from this conversation, Mr. W scheduled a face to face appointment with a member of our tax resolution team. At this time, we were able to give him a full breakdown on how to resolve his back tax issues.

The IRS was taxing Mr. W based on his self-employment income without taking into account his business expenses. This naturally resulted in an extremely exaggerated tax liability. Although his business was putting out some very high income numbers, his personal net income was low due to high business expenses. This low income was the primary reason for his tight financial situation and the resulting debt accumulation.

Our tax professionals began the process of resolving Mr. W’s tax debt situation by filing all unfiled tax returns. Although this produced a much more accurate picture of his outstanding tax liability, it showed that he still owed the IRS more than 90K. Since this was an amount that far surpassed his ability to pay given his current income stream, we recommended that he follow up with an IRS Offer in Compromise.

Professional Tax Resolution gathered all of the information necessary to document his specific financial situation and to explain why he would be unable to pay the full amount of his back tax balance. After multiple communications and submitted documents, the IRS agreed to a negotiated Offer in Compromise amount of a mere $1,000!

Mr. W’s case was a financial worst case scenario. He had numerous unfiled tax returns as well late payments on previously filed returns. In addition, he lacked the money to pay the required amount once an accurate back tax balance had been obtained. Luckily, Professional Tax Resolution represented him throughout the entire ordeal. Not only did we reduce the amount he owed the IRS to less than 1% of the original back tax balance but we saved him time, allowing him to devote more energy to the business that would continue to earn him even more money! While not every case goes as smoothly as Mr. W’s, our professionals pledge to always go the extra mile for our clients and follow each case though until we achieve the best possible resolution.

Tax Fraud Brings Serious Consequences

Posted on July 15, 2015 by Kursti Nakagawa

Tax Fraud

Tax Fraud Brings Serious Consequences

It turns out that tax fraud brings serious consequences as evidenced by the sentencing, earlier this year, of Rashia Wilson to 21 years in prison for multiple counts of aggravated identity theft and wire fraud. Ms. Wilson, otherwise known as the “Tax Fraud Queen,” was originally convicted and sentenced in 2013 when she plead guilty to stealing over $3 million dollars in a tax refund scam. Her original sentence, which was thrown out on appeal in 2014 due to errors in applying sentencing guidelines, was reinstated earlier this year.

From April of 2009 through September of 2012, Rashia Wilson and several accomplices were successful in carrying out a scheme that defrauded the federal government of approximately $3.1 million in tax revenue. They did this by obtaining personal information from medical billing records and financial statements and using this to generate fraudulent tax returns without the knowledge or permission of the taxpayers whose information was being used. Once the returns were filed, they collected the tax refunds in the form of U.S. Treasury checks and prepaid debit cards. This scheme continued successfully for over three years and four tax seasons until investigators finally cracked the case in the fall of 2012. Throughout most of this time, Wilson bragged about her tax crimes on various social media sites and taunted the IRS, saying that they would not be able to indict her. In her own words, she proclaimed, “I’m Rashia,the queen of IRS tax fraud … So if you think indicting me will be easy, it won’t.”

The filing of false tax returns as Ms. Wilson and her accomplices did is treated very harshly by the legal system. While failing to file a return is considered a misdemeanor, the filing of a fraudulent return is a felony and is typically given a much more severe consequence. Although the national average sentence for identity theft is 43 months, the sentencing judge handed down a much longer sentence in the case of Rashia Wilson. U.S. As U.S. District Judge James Moody Jr. said at her sentencing hearing, “She knew she was doing wrong (and) … reveled in the fact that is was wrong.” He cited a formula that takes into account the seriousness of the offenses as well as the defendant’s prior criminal convictions as the reason for her harsh sentence.

In response to the case of Rashia Wilson and others like it, the IRS has stepped up its efforts to combat identity theft as well as other types of tax fraud. As recently as this week the Financial Crimes Enforcement Network issued a Geographic Targeting Order requiring check cashing companies in two Florida counties to verify the identification of any person cashing a federal income tax refund check. These types of restrictions are aimed at identifying and stopping tax fraud schemes such as the one described above.

New Agreement Increases Fraud Protection

Posted on June 15, 2015 by Kursti Nakagawa

New Agreement Increases Fraud Protection

As a result of a Security Summit that was convened in March, the IRS has announced a comprehensive new agreement addressing the issues of tax fraud and identity theft. The agreement, which has been a work-in-progress over the past twelve weeks, comes as a result of the combined efforts of federal and state tax administrators, tax preparers and tax and payroll software firms. It includes new steps to validate taxpayer identity, increase information sharing between government and the tax industry and identify fraud schemes. According to Tax Commissioner John Koskinen, the agreement “represents a new era of cooperation between the IRS, states and the electronic tax industry.”

Over the past twelve weeks, the members of the Security Summit have focused their efforts on several new initiatives, all aimed at detecting and preventing tax refund fraud. The major points of their strategy are outlined below:

 Raising taxpayer awareness

This effort is designed to educate taxpayers on methods of protecting their tax and financial information and to increase their awareness of the dangers of tax fraud and identity theft.

 Authenticating taxpayer information

Included in this initiative are steps designed to authenticate the computer device tied to a return’s point of origin and to review the data tied to the transmission process. The review of transmission data will focus on such items as the internet address associated with the return as well as the metadata generated by its electronic submission.

 Identifying fraud

This initiative incudes an expanded effort to gather analytical information and fraud data from all parts of the tax industry. Because fraud schemes are easier to pinpoint with large amounts of data, this initiative should help to identify fraud schemes before they have a chance to proliferate.

 Sharing information

As part of this effort the committee plans to establish a Refund Fraud Information Sharing and Assessment Center. This will allow the public and private sectors to share tax information efficiently which, in turn, will provide more accurate data to support fraud investigations.

 Increasing cybersecurity

Under this initiative, members of the broader tax industry have agreed join the IRS and state tax agencies in abiding by the cybersecurity standards set by the National Institute of Standards and Technology.

Tax Commissioner John Koskinen summarizes the recent efforts of the Security Summit by saying that they should give taxpayers “a safer and more secure experience” this next filing season. He goes on to say that, although the recent agreement represents great progress in the area of taxpayer security, efforts to safeguard the tax filing procedure will continue. According to Koskinen, this new effort is “good for taxpayers, good for tax administrators and good for the tax community.”