Tag Archives: tax debt

IRS Tax Debt Alert – Tax Advocate Services Limited by Budget Cuts.

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The IRS Taxpayer Advocates Services are being forced to eliminate some of the services they offer, at least temporarily due to budget limitations. What are they cutting back on? In a blow to taxpayers, they will no longer deal with cases where the problem involves an IRS delay in processing tax documents. Of course as experienced Tax Professionals, we know that IRS delays are common and the backlog can create additional issues for taxpayers trying to resolving their tax situation. In fact, delays are becoming even longer and more frequent due to the current push for increased enforcement to collect an ever increasing amount of outstanding IRS tax debt.

The official IRS TAS statement read that “In the current federal budget environment, it has become clear that TAS will not have the resources to continue to handle its current inventory levels without adverse impact on its ability to provide effective and timely service. For that reason, we have been considering how to prioritize cases to ensure we can provide effective service to taxpayers who most need our assistance or whom TAS is best suited to assist.”

As of last week on Oct. 1, 2011, the announcement detailed that the TAS would generally no longer accept cases that only involve processing delays for the following issues: original returns; unpostable or reject returns; amended returns; and injured spouse claims.

Basically, the agency wants to try to prioritize their limited resources to taxpayers who are facing imminent threats of IRS enforcement action or who might otherwise be experiencing situations that meet the IRS definition of an economic burden.

What happens now if someone calls to report a delay in processing is that the TAS will simply refer the individual taxpayer onto the IRS function specializing in return processing issues, rather than accepting the case and resolving it themselves.

So how do you know if your case will be still be handled by the Tax Advocate Service? The TAS defines an “economic burden” according to four criteria:

  1. The taxpayer is experiencing economic harm or is about to suffer economic harm
  2. The taxpayer is facing an immediate threat of adverse action
  3. The taxpayer will incur significant costs if relief is not granted (including fees for professional representation)
  4. The taxpayer will suffer irreparable injury or long-term adverse impact if relief is not granted.

Here are some details about “systemic burden” cases which will NO LONGER qualify for TAS representation.

  1. The taxpayer has experienced a delay of more than 30 days to resolve a tax account problem
  2. The taxpayer has not received a response or resolution to the problem or inquiry by the date promised.
  3. A system or procedure has either failed to operate as intended or failed to resolve the taxpayer’s problem or dispute with the IRS.

The viewpoint of the TAS is that processing delays at the IRS typically arise either because the affected functions are overloaded with work or because of systemic processing glitches. Usually all the TAS can do in these cases is contact the appropriate IRS function and advocate for a resolution of the problem on a taxpayers behalf.  During this time the service used to provide updates to the taxpayer and look for patterns of delay to identify large systemic problems.  But, this watchdog type work is simply something they can no longer afford to continue to perform.

Are their exceptions? Yes, a few. The TAS added a caveat that it would help with a case when it received a referral from a congressional office or, if the expected refund would resolve an outstanding balance on another year’s return.

What does this mean for the taxpayer?  It may be more important than ever to consider hiring professional help to resolve your tax debt situation. With fewer and fewer self help resources out there, finding the right professional to represent you before the IRS has become critical. Time and delays cost everyone money and sometimes hiring a firm that will advocate on your behalf to resolve your problems correctly and quickly is the most cost effective alternative, even when faced with an economic burden.  At Professional Tax Resolution, we encourage you to do your research and look up our reviews and licensing.  As qualified professionals, we value our integrity and reputation and want you to feel confident that you have hired the right team to negotiate on your behalf.  To learn more about our services or for a free, no obligation consultation call us at 949-596-4143.

IRS to Fingerprint Tax Preparers and Require PTIN to be Renewed Yearly.

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We have many clients who come to us with huge tax debts that have resulted from errors or miscalculations on prior year returns. Sometimes these tax filing errors flag an audit or create what might start off as a small tax liability but after years of penalties and interest becomes a much bigger problem. Of course, we wish no one had to experience this in the first place but unfortunately until now there has been some leniency in the educational and documentation requirements for some tax preparers.

Luckily Uncle Sam also wants to be sure that whomever you trust to prepare your taxes also understands the increasingly complex tax code. While CPA’s like those at our firm have extensive licensure oversight, continuing education and years of experience, not all general tax preparers do. To overcome this, the IRS has just announced they are taking steps to begin fingerprinting all tax preparers and are stepping up educational requirements.

In addition to acting as proper Identification, the fingerprints will also be run through the FBI database. This will help identify any unscrupulous characters. Perhaps even more importantly is the new obligation for tax preparers to renew their Preparer Tax Identification Numbers (PTIN) every year in accordance with Notice 2011-80 and undergo a 15-hour continuing education requirement. All of this is set to take effect next year.

Up until now, the IRS had been issuing provisional PTIN for preparers who are not attorneys, CPA’s, accountants or enrolled agents. That former flexibility allowed others to prepare tax returns before taking competency tests and undergoing suitability requirements. This was partially because the testing and continuing education programs had not been implemented yet, but as of next year, this will finally be the case.

Before you hire anyone, we recommend checking their licensure and checking with the Better Business Bureau. Read reviews and understand the details of any services for which you are hiring.

At Professional Tax Resolution Inc. our CPA’s and EA’s are proud of our reputation. We welcome you to look up our license and review our A rating with the BBB. We have links to a variety of unbiased review sites including Yelp, The BBB, and Merchant Circle readily available on our home page.

Call us today for a free, no obligation consultation. No matter how worried you are, no tax issue is too complex! (949) 596-4143 or toll free (877)-889-6527

Tax Levy – Understanding and Resolving IRS and State Tax Levies

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Do you have or know someone with a tax levy? A tax levy is serious, it is the actual seizure of a taxpayer’s property by either the IRS or a State Tax Agency. It is one of the final steps in the enforced collection process and is usually exercised only after all previous attempts to collect a tax debt have failed.

A tax levy is different from a tax lien. The lien simply gives the issuing tax agency priority over other creditors with respect to the identified property while the levy actually results in the confiscation of the property.

The IRS must officially warn a taxpayer before assets are seized to satisfy an existing tax debt. The first official notice to go out is the Notice of Tax Due and Demand for Payment. If the delinquent taxpayer fails to respond to this notice, it will be followed by the Final Notice of Intent to Levy together with an official notice informing the taxpayer of their right to a hearing. Once this official communication process has been completed, the IRS can seize the identified assets without further notification.

With certain exceptions, the IRS can levy any physical asset held by a taxpayer. They can also levy retirement accounts, bank accounts, dividends, wages, insurance policies and numerous other assets that may be the property of the taxpayer but held by someone else. One notable exception to the list of assets that are subject to the levy process is the taxpayer’s principal residence. The taxpayer’s residence can never be seized to satisfy a tax debt of $5000 or less and can only be confiscated to cover a debt in excess of $5000 with written approval of the federal district court judge or magistrate. In addition, property (other than rental property) that is used as a residence by another person cannot be seized to satisfy a tax liability of less than $5000. Similarly, real or tangible property used in a taxpayer’s trade or business cannot be levied without written approval of an IRS director. Other categories of physical property exempt from an IRS levy include wearing apparel, school books and furniture and personal effects up to a fixed dollar amount. Certain types of payments are also exempt. This list includes workers’ compensation, unemployment benefits, some annuity and pension payments, certain types of Social Security, disability and welfare payments, judgments in support of minor children and certain amounts of wages and other income.

The IRS is a very powerful collection agency and an IRS Levy is one of its most aggressive actions. A taxpayer who receives and IRS Notice of Tax Due and Demand for Payment or an IRS Notice of Intent to Levy should realize that enforced collection action is imminent. At this point, the most effective response is probably to enlist the help of a qualified tax resolution specialist. An individual who understands tax law and has experience working with the IRS may be able to stop impending collection activity. There is also the chance that a tax professional will be able to reduce the tax liability that resulted in the collection action or eliminate it altogether.

If you are the target of a tax levy or any other type of aggressive collection activity by the IRS or State Tax Agency, our experienced tax professionals can help you forestall the action and resolve the tax debt issue that caused it. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (949)-596-4143 or by email at info@protaxres.com to receive a free, no obligation consultation.

Tax Liens – How to Remove an IRS or State Tax Lien From Your Credit Report

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The most effective tool the IRS has for collecting tax debt are tax liens. What’s worse is that they are very difficult to get removed. Even after you pay off the tax debt, the tax lien will stay on your credit report for up to seven years. Only after they have expired will they be removed from your credit report. These five steps show how to get expired tax liens off of your credit report.

1. Get Your Credit Report: Each year you’re allowed one free copy of your credit report. There are many sites out there that offer this service, such as AnnualCreditReport.com. Use one of these sites to get a copy of your Equifax, Experian, and TransUnion reports.

2. Check for Errors: Yes, even the credit agencies can make mistakes. Carefully check your credit report. If a tax lien that has been paid for over seven years ago, and it hasn’t been removed, you are able to dispute the information with the credit reporting agencies.

3. Dispute: Sometimes, if you view your credit report online, you can dispute an erroneous item through the website. Otherwise, you may send an email or letter to the agencies with your dispute.

4. Send Backup to Prove Your Dispute: When you send your letter of dispute, make sure you attach documents that prove the tax debt was paid, and when.

5. Check Your New Report: The Credit Reporting Agency will reply with a new copy of your credit report after 30 days. The new report should reflect the changes.

Back tax issues can be overwhelming, but there is hope. A good tax settlement professional has the knowledge and experience to help you overcome these types of problems. If you need help with a tax debt issue, or just want to see what options are available to you, talk to one of the licensed experts at Professional Tax Resolution. We specialize in tax settlements and you won’t talk to a salesperson. Call us toll free at (877) 889-6527 or visit us at www.professionaltaxresolution.com today.

For Those With Tax Debt, The Economy Could Cause Even More Problems.

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The struggling economy has caused more taxpayers than ever to find themselves with and outstanding tax debt that they simply cannot pay. When accepting tax settlements one of the requirements of the IRS is typically that the taxpayers file and pay their taxes on time in the future. Most taxpayers get behind initially due to a lost job, an illness or some other unforeseen event. It can be very difficult for taxpayers struggling financially to stay current on their current taxes while settling those owed for prior years. Any increase in taxes now or in the future would certainly make a difficult problem much worse for taxpayers already struggling with a tax debt.

As most people know the struggling US economy will force legislators to make difficult decisions in the upcoming years. One of the most common points of discussion is the raising of taxes. (https://inboundrem.com/) Lawmakers continue to discuss on how to handle the nation’s debt and do something significant rather than simply patch the problem. It seems likely that all potential solutions will be brought to the table during the course of the negotiations. One issue, addressed by President Obama in his 2011 and 2012 budget proposals, is the current mortgage interest deduction which is one of the nations largest tax expenditures. According to many estimates, the mortgage interest deduction cost somewhere between $80 and $103 billion in 2010, and its value over the 10-year budget window is expected to exceed $1 trillion

Proponents of the mortgage interest deduction argue that it makes affordable to taxpayers who would otherwise not be able to own a home and encourages home ownership. Critics argue that the deduction tends to benefit higher income taxpayers who would have purchased a home without the deduction and that deduction artificially drives up home prices. However, this same argument is cited by its proponents, who observe that eliminating the deduction could further impact home prices in an already depressed market.

Any significant increase in taxes either through an increase in the tax rates or the disallowance of current deductions would make it more difficult for those already struggling to pay their income taxes. With the uncertainly regarding the US tax structure and the economy in general it is more important than ever for taxpayers with significant tax debt to explore their options to actually resolve the tax debt. With taxpayers and with the US providing temporary solution will only result in a more difficult problem to solve in the future.

Contact Us our professionals here for more for more information about customized tax relief assistance. With over 16 years of experience, we have the can help you select the tax relief option that will best meet the specific needs of your tax debt situation. Contact us today at (877-889-6527 or info@protaxres.com to receive a free, no obligation consultation.