Tag Archives: tax help

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

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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.

IRS Tax Penalties Increased for Failure to File W-2s and 1099s. Yikes!

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When meeting with a new client regarding an outstanding tax debt we generally ask if all required W-2’s and 1099’s and have been filed.  It is not uncommon for the client to casually respond that they need file those also.  They are often surprised to hear of the substantial penalties that apply for the failure to file these information returns.  Since the IRS assesses these penalties on a per return basis the resulting penalties can be very significant when there are numerous documents that have not been submitted.

Under the Small Business Jobs Act, the IRS has implemented higher penalties for failure to file information returns such as a W-2’s or 1099’s. The new penalty structure is designed to encourage businesses to file these returns as soon as possible. The quicker the delinquent returns are filed, the smaller the penalty.

  • First tier penalties have been doubled from the previous amount to $30 per return. These penalties apply to any information return that is submitted after the filing deadline but within 30 days. The maximum penalty for a calendar year has been increased from $75,000 to $250,000 (from $25,000 to $75,000 for small filers).
  • Second tier penalties have been doubled from the previous amount to $60 per return. These penalties apply to any information return that is submitted more than 30 days after the filing deadline but before August 1st. The maximum penalty for a calendar year has been increased from $150,000 to $500,000 (from $50,000 to $200,000 for small filers).
  • Third tier penalties have been doubled from the previous amount to $100 per return. These penalties apply to any information return that is submitted after August 1st. The maximum penalty for a calendar year has been increased from $250,000 to $1.5 million (from $100,000 to $500,000 for small filers).
  • The penalty for intentional failure to file has been increased from $100 to $250 per return.

The new penalty structure applies to information returns that were required to be filed on or after January 1, 2011.

Is the IRS Finally Easing Up On Taxpayers? For Tax Liens, the Answer is Yes.

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The number of tax liens levied by the IRS has increased dramatically over the past several years. Lien filings increased from 168,000 in 1999 to 1.1 million in 2010, a gain of over 550 percent. While it can be argued that tax liens are a necessary part of collecting tax revenue and promoting tax compliance, there is also a concern that they place an excessive burden on taxpayers who are already financially strapped. In an attempt to relieve taxpayer stress in the current economic environment, the IRS has announced that it will initiate a series of new policies and programs to help taxpayers pay their back taxes and avoid getting a tax lien. These changes are outlined below.

  • The dollar threshold for issuing a tax lien is being lifted from $5000 to $10,000.
  • The IRS will agree to withdraw a tax lien when the taxpayer signs up for a direct debit installment agreement or switches from an existing installment agreement to a direct debit agreement. However, the lien will only be withdrawn after a probationary period to insure that the taxpayer’s direct debit agreement is in place and working as planned.
  • The IRS is promising to streamline the process for withdrawing a tax lien once the balance of the outstanding tax debt has been paid in full. As has previously been the case, the taxpayer will still have to submit a formal written request that the lien be removed once the tax debt is paid.
  • New Offer in Compromise guidelines have been instituted to make this tax settlement option available to a much larger group of taxpayers. The maximum tax debt ceiling allowed for qualification has been raised from $25,000 to $50,000 and taxpayers with annual incomes up to $100,000 can now qualify for an Offer in Compromise.
  • Small business with as much as $25,000 in tax debt will now be eligible to apply for an installment agreement where previously the maximum tax liability allowed to qualify for an installment option was $10,000.

These changes should address some of the concerns highlighted by national taxpayer advocate Nina E. Olsen in her annual reports to Congress. She has argued that tax lien filings have ruined the credit of millions of Americans and as a result, have made it even more difficult for them to pay the debt they owe the IRS. A tax lien is picked up by all three credit-rating agencies and can lower a credit score by as much as 100 points. Since credit reports are often used by employers, landlords, car dealerships, credit card issuers and mortgage lenders, a tax lien can effectively make someone unemployable and unable to obtain housing and transportation for the seven years it remains on the credit file after the tax debt is cleared and the tax lien is lifted. The recent changes to IRS policy outlined above should help to relieve taxpayers of some of these financial hardships. IRS Commissioner Doug Schulman has said that it is his aim “to promote tax compliance while minimizing the burden on taxpayers.” He further maintains that the IRS must continually revise and update its policies in order to fulfill this mission.

If you have an outstanding tax debt and are facing a possible tax lien or wage garnishment, we can help you select the tax settlement option that will best meet your needs. For more information about our services, visit us today at www.professionaltaxresolution.com. Contact us today at (949)-596-4143 or info@protaxres.com to receive a free, no obligation consultation.

A Successful Offer In Compromise – $74,000 IRS Problem Settled at a 95% Discount.

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In February of 2011, Professional Tax Resolution finalized an Offer in Compromise agreement for a client who had initially contacted the firm in May of 2010. The taxpayer in question had an outstanding tax liability of over $74,000 which she was unable to pay. In this particular case, the debt was a combination of unpaid taxes, interest and penalties which had accumulated over a period of ten years. After verifying that the client met the IRS Offer in Compromise eligibility requirements, our firm initiated the settlement process by filing returns for tax years 2005 through 2009 which had never been filed. Once these returns had been finalized, we had an accurate assessment of the client’s total tax debt and were able to use this amount, together with her current financial information, to calculate a reasonable settlement offer. The completed Offer in Compromise application, including supporting documentation, was submitted to the IRS in July. Because the taxpayer’s eligibility had been well documented and established IRS filing guidelines had been adhered to throughout the application process, the initial settlement offer was accepted by the IRS without argument. The end result was the successful resolution of a $74,579 tax liability for $3785, just over 5% of the original debt!

The taxpayer whose settlement case is described in the preceding paragraph is a single mother who has struggled with chronic health problems for many years. From 1999 through 2009, a series of health-related setbacks resulted in periods of unemployment and accumulating tax liabilities. The client was hospitalized in January of 2010 in response some life threatening complications resulting from her health condition. She now receives state disability and is having trouble meeting her basic financial needs. Since it was very unlikely that this taxpayer would have been able to pay the full amount of her tax debt within a reasonable period of time, she was 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 her outstanding tax liability and therefore met the doubt as to liability standard for eligibility.

• The taxpayer’s eligibility can be adequately documented.

Professional Tax resolution submitted documentation for the client’s medications, outpatient medical treatment, hospitalization and disability claims.

• The total amount of the tax debt is accurate based on tax returns that have been checked, submitted and refilled when necessary.

Professional Tax Resolution filed a tax return for any year where a return had not been previously submitted and checked all other past tax returns for accuracy.

• The Offer in Compromise application and the necessary supporting documentation are 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. 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 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 (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

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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.