Tag Archives: Tax Settlements

Tax Liens – How to Avoid Your Information Being Published

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In order to encourage compliance in the payment of outstanding tax debts, the California Franchise Tax Board is authorized to publish a list of the 250 largest state tax delinquencies in excess of $100,000. The list only includes amounts for which official tax liens have been recorded. Since the list is a matter of public record, the Tax Board is required to provide a written notice to the taxpayer before publishing their name on the list. Once an official notice has been issued, the taxpayer’s name will be posted on the list if the tax debt has not been resolved within 30 days.
As with all other official correspondence from the IRS or any State Tax Agency, a notice such as the one described above should not be ignored. Tax agencies are the most powerful collection agencies in existence and publishing a list of delinquencies is just one method they use to enforce compliance. Since there are always steps that a taxpayer can take to resolve any tax debt issue, the worst possible course of action is to ignore the problem. In the case of the California Franchise Tax Board’s tax delinquency list, a taxpayer’s name will not be included provided they contact the Board in an attempt to resolve the tax debt within 30 days of receiving official notification of the impending publication of their name. The list will also not include the name of a taxpayer who has either initiated or completed a verifiable bankruptcy petition, entered into an installment agreement with the collecting agency or had their tax debt officially identified as “not collectible.”

 

Click the “Learn More Link” or Call (949) 596-4143 to have one of our CPA’s provide a Free IRS or State Tax Lien Notice Review and Consultation.

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.

Research Before You Hire. Protect Yourself From Tax Settlement Scams

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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 settlement firm that was charged by the Federal Trade Commission with making false promises to consumers and cheating them out of more than $60 million.  The company charged up-front fees of up to $25,000 and then didn’t deliver the advertised tax relief. Two other tax settlement companies that have been charged with similar infractions are TaxMasters and Roni Deutch, a California tax attorney. The Attorneys General in Texas and Minnesota charged that most of the calls made to Taxmasters’ toll-free number were answered by sales people who made unrealistic promises in order to trick customers into paying large up-front fees of anywhere from $1500 to $9000. Along those same lines, the Superior Court of California ordered Roni Deutch, who calls herself the Tax Lady on late night television commercials, to reimburse dissatisfied customers who were billed $1600 to $4000 for tax relief they never received.

Many unethical tax relief services have popped up in response to the growing need for tax debt resolution services created by the current economic downturn. In light of recent news headlines identifying tax settlement scams, it is clear that any taxpayer who is looking for help should do the necessary research before hiring a company or individual advertising tax resolution assistance. While the assistance of a qualified tax professional can be an invaluable asset in negotiating with the IRS to resolve a tax debt issue, it is important to do the necessary footwork before deciding who to hire.

Audited? Overwhelming Penalties & Interest? Request a Penalty Abatement.

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Taxpayers with tax debt soon learn that the actual amount of tax they originally owed the IRS or State is only a part of the amount they now owe overall. The balance may be much larger due to the assessment of penalties and interest. Although many find it shocking, it is not uncommon to balances that have increased by as much as 50% because of penalties and interest.

One of the larger penalties is the “Accuracy Related IRS Penalty”. This large fee is generally 20% of any portion of a tax underpayment which the IRS determines is attributable to one of the following:

1. Disregard or negligence of IRS rules and regulations

2. A substantial understatement of IRS income tax due

3. A substantial valuation misstatement covered under Chapter 1 of the Internal Revenue Code

4. A substantial overstatement of a pension liability

5. A substantial estate or gift tax valuation understatement

When is this penalty assessed? Taxpayers who have gone through an audit often incur an “accuracy related penalty.” Most often this penalty is the result of an audit where it was determined that there was a substantial underpayment of the taxes due at the time of filing.

This is one of the reasons that an IRS Audit can be so intimidating and worrisome. Taxpayers fear not only the tax debt itself but the very significant addition of the penalties and interest.

In these situations, hiring a professional tax settlement firm should be strongly considered. The problem with having significant amounts of tax debt is that outstanding tax debt issues are usually owed to both the IRS and state tax boards for multiple years. Unpaid tax debts resulting in the assessment of the “accuracy-related penalty” are generally also assessed underpayment penalties and multiple other penalties and fees. As if that wasn’t enough, until they are paid in full, all of these balances continue to accrue interest.

Unfortunately these situations can continue to snowball until they are so large and difficult to solve that they require a thorough examination of all tax settlement options, especially for taxpayers that are already in a poor financial situation. There is hope though. A qualified and reputable tax resolution firm can help you determine if you are eligible for IRS penalty abatement. If you are a candidate, it is possible to request an IRS penalty abatement of the assessed “accuracy-related penalty.”

To file this penalty abatement request, the taxpayer must be prepared to demonstrate that the taxpayer “acted in good faith and has reasonable cause”. The determination of whether a taxpayer acted with “reasonable cause” and in “good faith” is made by the IRS on a case-by-case basis. Hiring the right professional to ensure you have a solid case becomes very important as the IRS will take into account all specific facts and circumstances. Probably the most important factor the IRS considers is the extent of the taxpayer’s effort to report the proper tax liability.

If a taxpayer did not keep adequate books and records, they may have a very difficult time claiming to have acted with “reasonable care”. However, a taxpayer who has honestly relied upon the advice of a tax professional, and who has made a “reasonable effort” to assess their IRS tax debt liability, will have a better case even if the advice they received turned out to be incorrect. An honest misunderstanding of fact or law may also be considered “reasonable cause and in good faith” if the IRS feels the misunderstanding is reasonable.

Of course, simply requesting the abatement is not enough and just because you previously relied upon the advice of another or you had an honest misunderstanding of the tax law does not necessarily demonstrate to the IRS that you had “reasonable cause and good faith”. This is why the IRS looks at all of the facts and circumstances when considering a taxpayers request for tax debt penalty abatement.

Talk with your professional tax resolution specialist as it relates to your specific circumstances. Carefully consider all of your tax debt settlement options such as requesting an IRS penalty abatement, entering into an installment agreement, submitting an offer in compromise, and various other alternatives.

Remember, the problem won’t go away, it only compounds so the worst option is to do nothing.

Our licensed experts at Professional Tax Resolution (www.professionaltaxresolution.com) can assist you in determining which tax settlement options are appropriate for you based not only on your tax debt but your financial circumstances as well.

Policy Change for Tax Settlements Involving Innocent Spouse Relief

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The Internal Revenue Service has changed their policy regarding those tax settlements dealing with a request for Innocent Spouse Relief. Originally there was a two year limit on the innocent spouse relief, but effective Monday, July 25, 2011, that has been eliminated.

The IRS initiated a review of the equitable relief provisions of the innocent spouse program earlier this year, and decided to make changes in both the policy and the program. Those changes will become fully operational this fall and additional guidance will be issued, according to the IRS. The IRS said it would no longer apply the two-year limit to new equitable relief requests or requests currently being considered by the agency, as of Monday, July 25, with respect to expanding the availability of equitable relief.

If the collection statute of limitations for the tax years involved has not expired, a taxpayer whose equitable relief request was previously denied solely due to the two-year limit may reapply using IRS Form 8857, Request for Innocent Spouse Relief.

The new rule will automatically be applied to taxpayers with cases currently in suspense and should not reapply. The two-year limit in any pending litigation involving equitable relief will not be applied, according to the IRS. The IRS said it would suspend its collection action under certain circumstances where the litigation is final.

If you need help with tax debt, talk to one of our licensed experts today!