Posts Tagged ‘Tax Irs’

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Income Tax Relief – 4 Tax Relief Programs

September 21st, 2011



Paying the government “their” share of your income may be not only hurt us financially, but emotionally as well, especially if you think that they aren’t putting the money to work for the people’s benefit. As a taxpayer and law abiding citizen of wherever you may be from, it’s your obligation to do so anyway. But with everything skyrocketing in price, it’s no wonder that you’re probably falling behind payments. If you feel like you fit the description of the “person” above, then you are not alone – there are many of you delinquent taxpayers, and I thank you for being one of them.

The reason for that is the government took notice of what was going on (your inability to pay), and in turn responded to the situation by implementing the 2001 Economic Growth and Tax Relief Reconciliation Act. With this come several income tax relief programs, which would be more than capable of helping you out with your tax problems. Different states may have dissimilar methods of providing their masses with tax relief, so what I’m about to state next are 4 of the most popular programs that you can avail. And here they are: first income tax relief program that the IRS offers is known as the payment plan.

Here you can settle your problems by making a series of installments. The timeframe granted for you to pay them back, as well as the terms of agreement, are completely negotiable; but dealing with the IRS will need you to have some negotiability, or the smarts to debate. If you know nothing and have the tendency to deal with individuals using emotion and muscle, then its best that you get a tax relief agent to negotiate on your behalf. Only then will you be able to get the best deal possible with this particular program. The 2nd income tax relief program is IRS Tax Settlement.

With this, you’ll be permitted to settle your taxes for a lesser percentage. How much “less” you’ll be paying would depend on the following: the amount you earn and spend on a regular basis, the total value of your assets, and how old you are. 3rd program would be compromise, which functions the same way as the 2nd, but the only difference is that they take into consideration your capability to pay instead of the 3 factors for the 2nd program. Last income tax relief program is penalty abatement, which may be the hardest of all 4 mentioned here to avail – why you ask? Well to qualify you need some rare event that would render you incapable of paying what’s due, to happen to you, something that was completely out of your control.

Take for example the following: a tornado was in town, and tossed your house and other assets into the air, smashing it into pieces. Having such a tragic event happen to you could mean good news, in the sense that you’ll gain tax relief. An earthquake may also alleviate the burden placed on your shoulder (courtesy of the IRS), as well as a fire. Another way would be you receiving bad advice from an adviser regarding this subject matter, or mistakes and changes made by the IRS. So that’s all four programs for you to make use of, so feel free to pick one that best suits you.

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Enrolled Agents vs Tax Lawyers

March 14th, 2011

Dealing with tax problems entails a good amount of hard work and stress, which is why it is not advisable to deal with such problems on your own. It requires that you have a fair understanding not only of the taxation process but also of how the IRS operates. Trying to gain such understanding is quite stressful in itself; much more is attempting to apply it to resolve your tax issues with the Internal Revenue Service and get tax relief. The sheer complexity involved in taxation and tax problems is what drives a lot of individual taxpayers and businessmen to approach a tax lawyer for assistance. While it is commendable that these people accept the need to seek assistance with their tax problems, they don’t always ask for help from the right tax relief professional. A tax attorney is not always the best person to seek assistance from when it comes to tax problems. Since it’s not a legal problem, but a tax problem, the IRS and State simply wants to know when your delinquent tax returns are going to be filed and when & how your taxes are going to be paid. What you need is a professional advocate who has the knowledge of the enforcement and collection procedures of the IRS, the State Franchise Tax Board and who has the specialized experience to effectively resolve these tax issues in your best interest.

Profile of the tax attorney

This is not to say that tax lawyers are not suitable for any kind of tax problems. If you are being accused of criminal matter, tax evasion, tax fraud, or any other serious tax related crimes, then a tax lawyer is your best bet for defense. Tax lawyers are also the best people to seek help from if you or your company wishes to sue the IRS for any wrongdoing.

What exactly is a tax lawyer? Tax attorneys are attorneys-at-law who specialize in tax and tax related laws. They, like other kinds of practicing lawyers, holds a Juris Doctor degree and have passed the bar exam provided by the state where they hold practice. Aside from standing as counsel on your defense, a tax lawyer can also perform other functions such as provide tax advice and assist in tax preparation. There are, however, certain limitations to what a tax attorney can do for you. For one, tax lawyers are only allowed to practice in the state where their licenses were issued. Also, tax lawyers are not guaranteed to have a broad understanding of how the IRS operates – what a tax attorney can promise for certain is only understanding of tax laws of his respective state and the federal government.

Then again, you can by all means still hire a tax lawyer to help you with your tax problem. This move makes perfect sense if you are a big corporation or a rich individual taxpayer who would not miss paying upwards of $500 (and possibly much more) per hour plus all other costs – because that is how much good tax attorneys charge nowadays.

The more reasonable and appropriate option

In the case of the majority of individual taxpayers and businesses who have more plans for their hard earned funds than on spending them on extremely high attorney fees, there are other tax professionals that can provide the same or even better service than tax lawyers. On top of this list are Enrolled Agents; they are your professional tax advocates. Enrolled Agents are tax professionals certified by the IRS to represent clients in tax proceedings, hearings, audits, appeals and other tax related scenarios. By a far cry, Enrolled Agents are the best type of tax processionals that individual taxpayers and corporations can approach for assistance with tax relief and tax problem resolution. This is because Enrolled Agents have the most extensive experience when it comes to dealing with the IRS and like attorneys, are knowledgeable with even the most complex of tax laws. So, the next time you are faced with any tax problem, save yourself from worry, complications, and high cost by choosing a qualified and experienced Enrolled Agent that specializes in tax relief and tax problem resolution to assist you.

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Enrolled Agent Course Summary on IRS Collection of Back Taxes

December 4th, 2010

When enrolled agents represent taxpayers for past tax years, the most important issue to consider is expiration of the collection period. The IRS generally has 10 years from the date of a tax assessment to complete the collection process. Back taxes assessed for longer than that are no longer payable.

Absent a few specific IRS actions that can extend the 10 year period, taxpayers may obtain relief from owing tax by simply waiting until the expiration date. At that time, they can also acquire a release of any tax lien the IRS previously filed.

One situation that extends the 10 year IRS collection period occurs when a taxpayer agrees in writing to allow the IRS more time. Other cases that give the IRS extra time to collect back taxes are taxpayer bankruptcy filing during the 10 year period, taxpayer filing of an offer in compromise during the 10 year period, taxpayer application for an assistance order during the 10 year period, and taxpayer request for a collection due process hearing during the 10 year period. So using your enrolled agent CPE to accomplish any of these actions on a taxpayer’s behalf does affect the tax collection expiration date.

Individuals need to obtain professional representation to determine the best strategy for dealing with tax collection deadlines. These are opportunities for you to promote your status possessed from passing the enrolled agent exam. You can obtain a taxpayer’s authorization to gather from the IRS a record of the person’s account and tax transcripts.

Taxpayers who have not filed tax returns for several years need an assessment of whether they are possibly entitled to some tax refunds. The expiration date is different in these cases. Taxpayers are only entitled to unclaimed refunds of overpaid tax for 3 years.

In many cases, using refunds for any of the preceding 3 years is a sound avenue to satisfy tax liability for other years. One of the advantages you can demonstrate to people for hiring you is that your enrolled agent course trained you in all aspects of tax return preparation. As an enrolled agent you can serve the dual role of tax preparer and taxpayer representative with the IRS.

The 3 year period is also the length of time that the IRS has to audit tax returns. However, the expiration period ends three years after the tax return is filed. Therefore, filing a 2006 tax return on July 31, 2011, means that the IRS has until July 31, 2014, to audit the return.

But there are also exceptions to the statute of limitations on audits. The IRS can audit a tax return for up to 6 years after determining that income is understated by at least 25 percent. In addition, a fraud allegation by the IRS opens a tax return to audit regardless of its date. Avoiding these traps is yet another reason for inspiring a taxpayer to use the services of anenrolled agent.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

 

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IRS Increasing Enforcement Activity

October 15th, 2010



Expect the Internal Revenue Service to increase its tax collection activity. This follows IRS action in the past couple of years of issuing more levies and scrutinizing particular types of tax returns. The services of an Enrolled Agent (EA) are becoming more valuable to a greater number of taxpayers.

More Money and Audits

For fiscal year 2010, Congress has allocated $12.2 billion to the IRS. Much of that is intended for enforcement efforts. The IRS enforcement budget for this year is $5.5 billion. The prior fiscal year was among the most productive in IRS history regarding collection efforts.

There were approximately 1,425,000 audit examinations of individual tax returns in fiscal year 2009. The total number of audits for individuals increased only slightly in 2009 compared to 2008. However, audits of taxpayers with income of $1,000,000 or more increased significantly last year. The chance of an individual return being audited for taxpayers with more than $1,000,000 of income was 6.42 percent. Audits of individual tax returns for those with income of $200,000 or more have increased substantially in recent years. The percentage of taxpayers audited who had income of $200,000 or more in 2009 increased to 2.89 percent compared to 2.57 percent in 2006. Essential services to this demographic are necessary from more individuals entering theenrolled agent program.

Audits of tax returns for S corporations increased about 40 percent in 2009 compared to 2005. While the number of audits has increased significantly, the percent audited has not increased nearly as much. The percentage of S corporation returns that were audited last year was 0.4 percent. For partnerships the audit rate was 0.38 percent.Enrolled agent continuing education (CPE) will focus more on business tax returns.

More Levies and Liens

The IRS also filed more than 3 million bank levies and nearly 1 million tax liens in the fiscal year that ended September 30, 2009. In fiscal year 2008, the IRS issued 2,631,038 levies on bank accounts, wages and accounts receivable. That was an increase of 1,197 percent over 2000.

Timely response to an IRS notice is critical. Failure to respond results in assumption of notice accuracy by the IRS. The next IRS action is a notice to levy bank accounts. Knowledge obtained in thecontinuing education of enrolled agents is called upon for accurate response to the multitude of IRS notices.

Taxpayers need professional help for many IRS notices. This is a consequence of so many notices pertaining to business income and expenses that involve checking detailed records. It doesn’t make sense to hire an expensive tax attorney for smaller issues. However, whether a matter is big involves some subjectivity. Professional help becomes increasingly important as the IRS appeal system become more complex and difficult.EA CPE is addressing how the resolution process is constantly changing. So a tax resolution specialist brings considerable value.

More People

Even before this year’s extra $12.2 billion from Congress, IRS staffing of enforcement personnel was on the rise.

The number of revenue officers, revenue agents, and special agents in fiscal year 2009 was 21,059. That was a 4.2 percent increase over fiscal year 2005. Taxpayer representation will require more individuals to obtain [EA certification].

In addition, IRS Commissioner Doug Shulman has announced the creation of a specialized unit to focus on wealthy Americans with complex business organizations whose legal mechanisms may “mask aggressive tax strategies.”

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State Tax Returns

August 13th, 2010

Tax returns are forms filed by the Internal Revenue Service (IRS) or the state tax collection agency. These forms contain information on the calculation of income tax or other taxes. The standard US individual tax return is form 1040. There are several variations of this form such as the 1040EZ and 1040A with different supplement forms.

Americans who earn more than a specified amount of money are required to file tax returns by law. IRS demands tax returns on the basis of three parameters, which includes filing status, age and income level.

Filing status is based on a person’s marital status on the last day of year. This includes single or joint return status. Filing requirements vary according to a taxpayer’s filing status. According to the IRS, all those earning a regular income should file a return. However, there are certain rules for the elderly and for children under the age of 14 with an investment income. There are certain income limits for filing the tax return. If a person’s gross income is not exceeding that limit then they need not file any tax returns. Employment income, income from self-employment and investment income is all taxable income.

Many Americans file their returns online rather than paying taxes themselves. Many companies offer free or paid services for preparing tax returns. There are many websites that render the services of filing tax returns. These websites display tax tables and tax rate schedules for the current year and also provide downloadable forms and publications. They also provide status reports on tax returns and store records of previous year’s tax return to taxpayers.

IRS also has an electronic tax filing process, which has made the tax filing process completely paperless. IRS has implemented two pilot programs to replace handwritten signatures on paper with electronic-enabled numbers. Electronically tax filing enables taxpayers to make direct deposit of taxes to the IRS or using credit card. It also assures that the IRS has received their forms on time and sends them the verification for that.

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Farmers Tax Guide – IRS Publication 225

August 6th, 2010

The IRS has released the 2006 farmer’s tax guide. The guide referred to as publication 225 contains all the pertinent information on the farming business – whether you are a farm owner or tenant. “If you cultivate, operate, or manage a farm for profit which includes stock, dairy, poultry, fish, fruit, vegetable, and truck farms, this guide would serve you well”, IRS spokesperson, Clay Sandford said.

There are over 10 millions Americans who file farm tax returns or Schedule F. IRS publication 225 explains federal tax laws related to farming and how farmers and their tax preparers can figure out taxes and how to file a farming tax return. The updated IRS publication 225, which is one of the most helpful IRS publications, also provides new information on tax laws for 2006 and 2007.

“It does a wonderful job of explaining 90 percent of the tax law in relatively good fashion”, said Guida van der Hoeven, a specialist from N.C Cooperative Extension Service and a member of the National Farm Income tax Extension Committee – a group that reviews the publication for clarity and accuracy.

The Farm tax guide provides a host of information on issues such as what kinds of records farmers must secure and for how long, tracking farm income and expenses, employment taxes, tobacco buyout program, et cetera. The guide is also very helpful

in providing information written in layman’s term, so that farmers can understand the tax language when communicating with a tax professional.

The Farmers Tax Guide as well as other IRS forms and publications can be obtained by calling 1-800-TAX-FORM or through the IRS website, www.irs.gov

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