The Blog

Mrs. M. was referred to us by a local attorney. Her husband had recently passed away and, shortly after his death, she became aware of an outstanding IRS tax liability in the amount of an astonishing $1,200,000. Mrs. M. had had no knowledge of this tax debt before her husband’s death.  A few months later in our initial meeting with her, we learned that her personal tragedy was even worse than the death of her husband and realization of this massive IRS debt.  She informed us that she had hired a very large tax settlement firm to resolve the issue and had already paid them a whopping $25,000.  She came to us after six months, when she had no indication that the tax settlement company … Continue reading →

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 … Continue reading →

If you are unemployed you are probably worried about many other things but there are some tax consequences and conversely some tax breaks that result from being unemployed. Here are some facts that unemployed taxpayers will need to know when filing a 2011 tax return on April 15 2012. 1. Severance packages, Accumulated sick leave, Vacation, and Holiday pay are all taxable income. It is another terrible reality of being terminated. These amounts will have taxes deducted and be declared on your W2 as income. 2. Unemployment benefits are also considered taxable income. At tax time you will have to pay taxes on this income even though it was not deducted at the time the checks were issued to you. 3. You can be proactive and ask the government to … Continue reading →

Understanding The IRS “Soft Notice” Pilot Program to Encourage Income Reporting Compliance In 2007, the IRS launched a pilot program designed to decrease the tax gap by identifying unreported income. Under this pilot program, which is still in effect, IRS notices are issued to taxpayers when there is a discrepancy between the income reported on their tax returns and the income reported directly to the IRS by various financial institutions and employers. These “soft notices” do not identify specific discrepancies or calculate amounts due. They simply ask taxpayers to review their returns and to file amended returns if errors are found.  In spite of the fact that these “soft notices” do not require any specific response or action on the part of the taxpayers who receive them, … Continue reading →

We get a number of calls inquiring about the IRS Offer in Compromise Program. While an IRS Offer in Compromise is a very effective tax settlement option for a very well defined group of taxpayers, it is definitely not the optimum solution for anyone with an unresolved tax debt. The acceptance criteria for an Offer in Compromise are very specific, the application process is lengthy and the rejection rate can be high. Amazingly the IRS can also take up to two years from the date it receives the initial application to accept or reject an Offer in Compromise. With this timeframe in mind, it is often advantageous to enlist professional help when considering this tax settlement option. An experienced tax settlement professional will be able … Continue reading →

Feel like you are the only one with a tax debt problem? Ever wonder where in the US more people have the tax debt issues? Is this a problem of the rich or is the problem of incurring Tax Debt affecting everyone? A recent 2010-2011 analysis of tax liens from across the U.S. found that New York City, which happens to have some of the wealthiest neighborhoods in the nation, was actually the country’s leading geographic area for federal tax liens. According to the data,New York City accounts for nine, or 18 percent, of the top 50 U.S. zip codes with the most liens recorded over the past 12 months ending in September. Is this a problem of the rich of New York trying to skirt … Continue reading →

You may have read about some recent tax relief scams in the news.  Although there is no doubt that a competent tax professional can be a huge asset in reducing a tax bill or resolving an outstanding tax debt, taxpayers should be aware that there are tax settlement companies out there that actually compound existing tax debt issues. The bottom line is that, if advertised promises seem too good to be true, they probably are. While it is true that the IRS offers numerous tax settlement options for taxpayers who have outstanding tax liabilities, these options have specific qualifying criteria and are not granted automatically. Several tax settlement scams have made the news recently. Among them is American Tax Relief of Beverly Hills, a tax … Continue reading →

An inmate held at Riverfront State Prison in Camden, New Jersey pleaded guilty to aiding and assisting in the preparation of false and fraudulent tax returns on June 27. The inmate faces three additional years in prison and a $250,000 fine at sentencing, which is scheduled for October. He admitted that he helped other inmates prepare and file false tax returns designed to trigger tax refunds for several tax years, to which they were not entitled. The prisoner told inmates that employment taxes were held from the wages they earned while working in the prison, and they were entitled to claim refunds. However, the prisoners were paid no more than $5 per day, from which no taxes were withheld. The fraud scheme resulted in a … Continue reading →

The tax-exempt Kabbalah Centre and many of its charities is being investigated by the Internal Revenue Service for financial improprieties. Many of the charities are backed and supported by celebrities. Madonna had even replaced the CEO of one of the charities, Raising Malawi. The singer later moved the charity out of the Kabbalah Centre’s office after learning plans of building a girl’s school in Malawi were abandoned despite raising millions of dollars for that purpose. The former CFO has accused the Centre of financial improprieties and plans on coordinating with the IRS in bringing the group down. Several instances of tax fraud had been uncovered that could potentially bankrupt several directors due to tax debt and penalties. (buildersmerchant.com) If you have incurred business tax debt, … Continue reading →

If you received an IRS Notice of Deficiency, the following article outlines some frequently asked questions about what a ‘Notice of Deficiency’ is, what the letter states about your situation, and both how and when you should respond. Continue reading →