IRS Tax Help Blog with Lance Drury Law
It’s possible that a taxpayer could make settlement pro-posals to the IRS and “plead their case” that they could not otherwise pay the debt by mak-ing an “Offer-in-Compromise”.
In a position paper dated May 27, 2005, the American Associa-tion of Attorney-Certified Public Accounts revealed that “(Offers-In-Compromise) acceptance rate has dropped from 39.8% to 22.9% from 2001 to 2004, while the number of accepted offers declined from 38,643 to 19,546, a decline of over 50% in just three years.” A blockade put up by the IRS like on November 1, 2003, the IRS began charging a $150 processing fee for most Offer-In-Compromise proposals.Leave a Comment
Let’s say you’re married and you file a “married filing jointly” re-turn, to take advantage of the unique tax benefits offered by this particular filing status. You have a regular “day job” where your employer takes out your taxes every pay-check and gives you a W-2 at the end of the year. The two of you decide to take a weekend just to sort through all of the paperwork and get a grip on the tax situation with his business.
After muddling through the rec-ords as best you can, and de-ducting expenses, you determine that he owes taxes on $48,500 of taxable income.Leave a Comment
The subject of tax shelters and financial transactions meant to reduce taxable income has been a perpetual source of contention between taxpayers and the IRS.
A recent and prominent case, Superior Trading LLC et al. v Commis-sioner of Internal Rev-enue, No. 12-3367, tipped the issue in favor of the IRS. In a hit to taxpayers seeking to reduce taxes through some types of distressed asset/debt (“DAD”) transactions, the Seventh Circuit Appeals Court in Chicago, IL sided with the IRS.
The court ruled that such transactions are not legitimate tax shelters. Using such financial engineering in an attempt to reduce taxable income will very likely result in the original tax and additional penalties owed to the IRS.Leave a Comment
The IRS plans to step up investigations into businesses that may wrongly classify employees as contractors.
Employment tax law deals with employee-employer relationships in terms of tax obligations. Employers can classify people they hire as “employees” or “independent contractors”.
There are several cost benefits to labelling someone an independent contractor, leading to an incentive to do just that even when the relationship and dynamics of day-to-day work are similar to an employee-employer situation.
The IRS is working with many state employment agencies to review the tax classification of independent contractors (ICs). The Questionable Employment Tax Practices Program (QETP) is a result of lengthy consultation and discussion between public and private tax attorneys.
As of today, thirty-seven state employment agencies have submitted memorandums of understanding (MOUs) reg arding the Federal government’s QETP initiative.Leave a Comment
If you receive your “Notice & Demand of Payment” and you don’t pay the tax debt, the IRS can then choose pursue the lien on your property. When they do, all of your creditors are notified that the government now has a claim against your property.
Not only does it place a lien against property that you currently own, but it’s also against any future property that you might own, as well as accounts receivable if you own a business (money that’s owed to you). This is why a lien can do serious dam- age to your credit rating. Why would someone consider giving you a loan for property if they know that the government will immediately have a lien against it?Leave a Comment
Did you know that you have the power as an individual taxpayer to appeal almost any decision made by the IRS? In fact, you can appeal audit findings, penalties and interest, rejected offers-in-compromise, liens, seizures, garnishments and other collection actions.
However, according to the IRS, “Appeals is not for you if:
- Your only concern is that you cannot afford to pay the amount you owe.
- The correspondence you received from the IRS was a bill and there was no mention of Appeals.”
So in these two instances, an appeal would be a premature action to take.
If you are concerned that you cannot afford to pay the tax you owe, there are channels to go through before you would begin the appeal process.
In the United States, you are to file and pay taxes.
The only thing that’s voluntary about it is that you are the one that gets to do it, instead of the government doing it for you.
Because of that, you can choose to use various legal tax exemptions to your advantage to pay lower taxes. If the government was calculating your taxes for you, there would be a known way for the government to know what you should pay.
For instance, say you owned a legitimate part-time business on the side in addition to a regular job. You may be able to claim certain tax exemptions for that business according to the tax law.Leave a Comment
It’s ridiculous that a taxpayer might not be able to count on getting a right answer from the IRS regarding tax questions, especially considering that the IRS is the agency that is charged with the task of enforcing tax laws.
However, you may find yourself in a position where you’re already past the point of needing help with your tax returns. Filing this year’s tax returns may not be the issue.
The issue for you is:
- Maybe you haven’t filed at all…perhaps for 2 or 3 years or more.
- Maybe you’ve filed but haven’t paid the tax – and the IRS is sending you letters that are increasing in frequency and the language regarding collection is getting sterner.
According to the American Civil Liber- ties Union (ACLU), the IRS can read your electronic communications. In 1986, the Electronic Communication Privacy Act gave government agencies such as the IRS the authority to examine any electronic communications older than 180 days. Even if you erase all your mes- sages and statuses, rest assured that social networks, phone companies and ISPs have not. Digital records, especially texts, are incredibly cheap to store. As such, there is a comprehensive open book of what many think of as “priva te communication” available to the government.
The Electronic Communication Privacy Act specifies that a judge’s warrant is not necessary for a government agency to snoop through your records.Leave a Comment