Nurse Outduels IRS Over M.B.A. Tuition

A Maryland nurse accomplished two rare feats in her battle with the Internal Revenue Service: She defended herself against the agency's lawyers and won, and she got a ruling that could help tens of thousands of students deduct the cost of an M.B.A. degree on their taxes.

The U.S. Tax Court handed Lori Singleton-Clarke her victory last month, saying the 47-year-old Bryantown, Md., woman had properly deducted nearly $15,000 in business school tuition. The Tax Court ruling should make it easier for many other professionals to deduct the expense of a Master in Business Administration degree.
After getting word of the court decision, "I nearly yelled the roof off the house," Ms. Singleton-Clarke says. "I still can hardly believe it."

The IRS's rules on deducting work-related tuition are complicated and onerous, ultimately preventing most students from deducting their tuition. But this case clarifies the rules and will likely lead to more taxpayers taking the deduction, tax experts say.

Few taxpayers decide to go toe to toe with the IRS as Ms. Singleton-Clarke did, arguing her case without a lawyer. For good reason: In 2009, individuals won only about 10% of about 300 such cases, according to data from Tax Analysts. Ms. Singleton-Clarke fought her case in Tax Court, a venue where taxpayers don't have to pay the contested tax before going to trial. The court has a special procedure for small cases.

Some of the losers, such as several dozen tax protesters who defended the filing of frivolous returns, were tilting at tax windmills. Others were simply on the wrong side of the law, including a horse enthusiast who wanted to deduct his hobby losses, an unsuccessful comedian who tried to classify his expenses as business losses, and an attorney who claimed over $100,000 in medical deductions for his visits to prostitutes.

Of the few who did prevail against the IRS, nearly half came to court on a single issue: requests for "innocent spouse" treatment that decouples a spouse from a partner who is a tax cheat. This provision has been used mostly to protect unknowing wives against their husbands' tax misdeeds. One of the spouses granted relief last year was formerly married to an investment banker who didn't pay his taxes after his bonus didn't come though.

Ms. Singleton-Clarke's encounter with the tax system shows what it can take for one individual to prevail over the IRS against the long odds: favorable facts, obsessive organization, and fearlessness. She says she didn't have a lawyer because she couldn't afford one.


Source

IRS announces crackdown on fraudulent tax preparers

Internal Revenue Service Commissioner Doug Shulman announced plans today to increase the agency's oversight of paid tax preparers.

For the tax-filing season that's just beginning, the IRS will send letters to about 10,000 preparers whose returns include large volumes of certain types of errors and remind them to be vigilant about areas where mistakes frequently occur. These include the earned income tax credit and the first-time home buyer credit, both of which involve "quite a bit of fraud," Shulman said. Others include Schedule C business income and expenses and itemized deductions.

In the coming weeks, the IRS also will send agents to thousands of preparers on surprise and announced visits. In some cases, agents will identify themselves as IRS employees. In others, they will pose as taxpayers to see what kind of advice they get.

Longer term, the IRS will begin new registration, testing and continuing education requirements for paid preparers.

Today, anyone may prepare a federal tax return for anyone else. The IRS has no testing, licensing or educational requirements. Only a few states -- including California, Oregon and New York -- license or regulate tax preparers. (In California, anyone who prepares income tax returns for a fee and is not a licensed attorney, certified public accountant or IRS enrolled agent must register with the California Tax Education Council, complete an educational requirement on tax laws and obtain a surety bond to protect clients against fraud.)

Many tax preparers are CPAs, enrolled agents or attorneys who must meet educational, ethical and other requirements imposed by their professional or licensing organizations. But many preparers do not have to meet any specific standard when they fill out a tax return for an American taxpayer, Shulman said.

The new IRS initiatives will take several years to fully implement and will not be in effect for the current tax-filing season. They will:

--Require preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number.

--Require competency tests for all paid tax return preparers except attorneys, CPAs and enrolled agents who are active and in good standing with their respective licensing agencies.

--Require continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.

--Extend ethical rules that currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS to all paid preparers. This will let the IRS discipline or suspend tax preparers who engage in unethical or disreputable conduct.

The IRS will pay for these new initiatives by imposing a user fee on people who are registered and tested.

Shulman reminded taxpayers that they are legally responsible for what goes on their return, even if they hire someone to prepare it. He said most preparers are provide honest, excellent service to their clients.

Consumers should be wary of preparers who claim they can get bigger refunds than others or whose fees are based on a percentage of the refund. They should make sure the preparer will sign the return and give a copy to the client. Also make sure the preparer's firm will be around after the return is filed to answer questions.



Source

IRS tax relief help for your tax settlement to minimize tax problems

RS TAX FREE LIFE

Avoiding IRS tax debt problems:

Many people just end in pandemonium of receiving the notice of the IRS. The IRS problems do not assume menacing proportions overnight but after repeated notices from the IRS. Some of the prominent ways to avoid the IRS tax debt problems and free tax help from us are as follows:

• One should never take the IRS lightly.
• One needs to respond to the notices of the IRS instead of ignoring them
• One must file the IRS tax returns every year without fail. One should not allow the pending taxes to pile up.
• In the event of you not filing the IRS tax returns, the IRS files substitute for returns wherein you cannot claim some deductions that you are entitled.
• One should take utmost care that all the information furnished at the IRS office is correct, especially your postal address that has to be correct and current in all circumstances.
• It is better to avail the services of a reliable IRS tax debt settlement services company instead of trying to handle the issue personally.


Source

New Tax Preparer Requirements Have Drawbacks

The Internal Revenue Service proposals for registration, testing and continuing education of tax preparers has won praise from most stakeholders.

The rules, which will take several years to implement, will require all paid tax return preparers that must sign a federal tax return to register with the IRS and obtain a preparer tax identification number. Competency tests will be administered for all paid preparers other than attorneys, CPAs and enrolled agents. The rules also mandate ongoing continuing professional education and extend Circular 230’s ethics rules to all paid preparers.

“It will raise the credibility of the entire profession,” said Amy McAnarney, CPA, executive director of The Tax Institute at H&R Block. “The focus is on those that aren’t regulated today, and that’s the majority of tax preparers out there. We think it is a good thing for preparers, and the system itself.”
In her just-issued annual Report to Congress, National Taxpayer Advocate Nina Olson called the plan a “significant, far-reaching initiative.”

But she noted that one aspect of the plan might open the way for some to exploit and skirt the rules. The IRS plan announced this week would impose requirements on return preparers who sign tax returns but not on preparers who meet with taxpayers and prepare their returns so long as someone else signs them. To minimize the cost and burden, Olson said, an office may decide to employ one “signing” preparer who would be certified under the new rules, and an unlimited number of “nonsigning” preparers.

The nonsigning preparer would not have to register, pass an exam, or take continuing education courses, and the signing preparer would be unable to thoroughly review every return. In fact, Olson noted, the burden of the new rules themselves may cause more return preparation businesses to employ nonsigning preparers. “We are concerned that excluding nonsigning preparers could create an exception that swallows the rules,” she stated. She observed that not all nonsigning preparers need to be covered to protect taxpayers, and recommended that the IRS consider extending the new rules to apply to all unenrolled nonsigning preparers.

“The devil will be in the details. There will be time for these concerns to be addressed as they take the proposal and turn it into regulations,” said Roger Harris, chief executive of Padgett Business Systems. “But it’s a great first step.”

When the rules are fully implemented, the newly regulated preparer who undergoes the registration and ultimate testing process will have “a pretty strong credential,” Harris observed. “A person who is not an attorney, a CPA or an enrolled agent will have to decide which credential will ultimately work best for the preparer and his or her clients.”

Barry Melancon, president of the American Institute of CPAs, also expressed some apprehension about the new credential the rules will create. Although he agreed that the proposal will foster greater compliance with the Tax Code and more reliable service for taxpayers, he noted “concerns about the IRS plan to provide tax preparers who are not already CPAs, enrolled agents or attorneys with a certification based on limited qualifications. A new IRS examination process may cause confusion among taxpayers about the relative qualifications of tax return preparers.”

“It depends on how strict the tests are, how you promote the people that pass it, and how you position them in the marketplace,” said Harris. “Do you tell consumers the registered preparers are at the minimum level of competency, or do you say they’re as qualified as anyone else?

“There has to be a balance between testing for competency without being overly restrictive,” he added. “You want the test to be strong enough so the IRS can say it’s comfortable with the qualifications of those that pass it, but if the test is too difficult, it will negatively affect the industry’s need for tax preparers.”


Source

IRS Tax Problems -- Special Returns

Most people have employment income (W2) with only a few deductions. These are among the most simple and straightforward income tax filings to do. There are number of people who are self-employed or they have significant amounts of investments and are claiming both unusual income as well as significant deductions against their income. In some cases they IRS will agree with the teturn, while in other cases the IRS will reject the return and decide that you owe additional taxes. If you are not the tax care professional and do not understand all of the new tax laws that are generated every year then you probably will be in better hands if you use a tax relief firm and avoid avoid any problems or miscommunication with the IRS and your potential tax problems. Special returns for such areas as a large income in one-year, the estate returns, sales of investment property and other areas usually require the skills of a tax relief firm who has the resources to help you. These special returns if filed correctly will avoid future IRS tax problems and also avoid penalties and possibly interest that may be assessed for failing to file correctly.

Source

WAGE GARNISHMENT

Almost nothing is worse than having your wages garnished by an IRS Wage Levy. In the case of a Wage Garnishment, the taxpayer is directed to turn a significant percentage of his or her wages to the IRS. In the event that the IRS files a Wage Garnishment, the taxpayer's employer must intercept a percentage of each of his or her paychecks, and then forward that percentage to the IRS. Wage Garnishments remain in effect until the taxpayer's IRS back taxes are paid in full, or a formal release is negotiated with the IRS. The amount of money that the IRS can withhold is based on a variety of factors, such as whether or not the taxpayer is married, or the number of dependents the person in question has. Up to 90% of your salary can be withheld and sent to the IRS on every paycheck!
PowerTax Relief realizes that reductions in income can be disturbing and destructive to individuals and families. Shortly after garnished taxpayers get in touch with us, we start negotiations with the IRS for a release. In most cases we get wage garnishments lifted on our first contact with the IRS. If not, our tax relief experts will find out what the IRS requires to solve your tax problems and release the wage garnishment. We will work diligently on your behalf until your wages are released. We almost always get wage garnishments released before our client's next paycheck! You can count on PowerTax Relief for both Federal and State tax help.

Source

TAX SETTLEMENT & AGREEMENT

A tax settlement payment plan with the IRS is formally known as an Installment Agreement. It is possible that the IRS will accept monies for unpaid taxes over the course of up to five years. Sometimes after in-depth financial analysis, our income tax attorney may determine you do not meet the qualifications for an offer in compromise. If so, we consider the next best course of action to resolve your IRS debt problems.
Those individuals who fail to qualify for an IRS Offer in Compromise might be able to receive tax relief through Installment Agreements. If a negotiation with the IRS concludes that one's liquid assets are not sufficient to pay off one's debt, the IRS may opt for an installment approach, instead of a more severe IRS tax garnishment.
We will analyze your ability to pay and contact the IRS to set you up on the best plan for you. Most of the times we arrange for a payment plan with monthly payments substantially less then the IRS' first demands

Source