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.

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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.

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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

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IRS DEBT - PENALTY ABATEMENT

Individual IRS debt can escalate with alarming speed. This is because a large portion of the taxpayer's delinquent bills are composed of interest and penalties. Interest and penalties like an IRS lien alone can turn what would ordinarily be a moderate tax challenge into a major ordeal.
The good news is that having past tax penalties like wage garnishment and interest removed (or altogether stopped) is definitely possible. Moreover, if one did not pay penalties and interest correctly, one may qualify for a tax refund.
Pending the fulfillment of specific requirements, the IRS might remove the penalties and interest - either partially or in full. In the event that one can present reasonable cause for failing to pay one's taxes, confirm that no neglect characterized one's attempts to repay the tax debt in question, and verify that due diligence was implemented, the attainment of relief becomes more probable.
If you need tax help, our experts at PowerTax Relief will review your circumstances and determine if you meet the qualifications for penalty abatement. If you do, we will work with you to gather all of the necessary information and documents to put together an abatement package. We will then prepare the paperwork and submit it to the IRS on your behalf.

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As a taxpayer, you have rights...

There is nothing worse than having the Internal Revenue Service or another taxing authority such as the California State Board of Equalization (SBE), the California Franchise Tax Board (FTB), or the California Employment Development Department (EDD) chasing after you. However, as a taxpayer, you have rights, including the right to consult a tax lawyer.
We understand that dealing with a tax problem, whether it is a tax audit by the IRS, a California sales tax audit by the State Board of Equalization or a payroll tax problem with the Employment Development Department, can be a very stressful experience. Therefore, our tax lawyers work not only to minimize the taxes our clients owe, but also to reduce their stress by taking the weight of dealing with the IRS on a day-to-day basis off their shoulders.
There are many excellent California tax attorneys and tax lawyers. Most of those tax attorneys handle tax planning. They can tell you how to most efficiently plan your affairs to lower your taxes, and how to prevent tax problems from occurring. However, relatively few tax lawyers are tax litigation lawyers, or tax controversy lawyers. Tax litigation lawyers represent clients who have tax problems with the IRS or state taxing agencies. For example, if you or your company undergoes a tax audit a tax controversy attorney can represent you at that audit, or in any tax appeal from that tax audit. A tax litigation attorney can represent you in Tax Court, or any other appropriate court which may include the District Court, the Court of Federal Claims, or even the Bankruptcy Court. If you have a tax problem with a California tax agency a tax litigation lawyer can represent you in California Superior Court or before the Employment Development Department, Franchise Tax Board, or State Board of Equalization.
A tax controversy attorney can also represent you if you have a tax collection problem, and would like an offer in compromise or an installment agreement to pay your taxes. In addition a tax controversy attorney can represent you in a wide range of tax problems including the abatement of tax penalties, in summons enforcement actions, wrongful levy actions, and in wrongful disclosure suits. A tax controversy lawyer can represent you if you are a tax professional and become subject to IRS enforcement proceedings such as injunction actions against tax return preparers or an alleged violation of Circular 230. In short if you have a tax problem, a tax litigation attorney can help you.

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Criminal Tax Defense

The following are examples of Internal Revenue Service Criminal Prosecution Investigative proceedings:
Not only does the Internal Revenue Service (IRS) enforce civil tax laws, but it can also impose criminal charges leading to a conviction, fines and imprisonment.
If an IRS Special Agent ever contacts you personally, this may mean that they are conducting a criminal investigation. IRS Agents are known to visit the residences of you, your neighbors, and your place of employment.
If your bank notifies you that the Criminal Investigation Division of the IRS or the U.S. Attorney's Office is requesting copies of your bank records through a summons, there is a high likelihood that you and/or your company are under criminal investigation.
If your accountant is subpoenaed to appear before the Grand Jury and bring your records, a Federal Grand Jury is being utilized to conduct a criminal investigation of you and/or your company. The Grand Jury is gathering evidence at the request of referral of the IRS or other government agency.
If you receive a notice from the IRS that one or more of your previous tax years are being audited AND you know that the returns filed contain either understatements of income or overstatements of deductions, or both, there is a possibility that you will be investigated by the Criminal Division of the IRS.

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IRS Penalties and Interest Add Up Fast

If the IRS thinks that you have underpaid your taxes, they will immediately begin charging penalties and interest to your tax bill, without any investigation into the facts. Those charges can easily exceed the amount of tax they say that you owe… and these penalties and interest continue to add up daily.

There are many cases Tax Attorney Sheppard has handled where the penalties and interest have exceeded 50% of the overall tax bill. In some cases, we have helped our clients reduce or eliminate these charges through a process called abatement. We have also been successful in helping our clients eliminate any of these future charges by successfully negotiating Offers in Compromise.

Typical tax penalties include late filing penalties, late payment penalties, responsible person penalties, payroll tax penalties, sales tax penalties, accuracy-related penalties, civil tax fraud penalties, and substantial understatement penalties.

If these penalties and interest along with your principal tax liability are not satisfied properly, then the IRS can seek to:

• Seize your bank account or your retirement account
• Garnish your wages
• Place a lien on your home or car so you can’t sell it
• In some cases, impose criminal sanctions
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Offer in Compromise

The IRS has the authority to settle or compromise federal tax liabilities by accepting less than full amount under the program of Offer In Compromise. One of the three circumstances must be established in order for the IRS to accept IRS Offer in Compromise and resolve the debt:

1. Inability of the taxpayer to pay off the tax debt in full. This is the most common type of Offer in Compromise (OIC). Under this type of OIC the taxpayer makes a representation that based on the taxpayer's financial condition IRS will not be able to collect the entire tax bill from the taxpayer. The amount of this OIC must reflect the amount of the equity in taxpayer's assets plus the amount that the IRS could collect from taxpayer's future income.
2. Actual presence of tax liability. The taxpayer must prove that the amount of tax or any penalties being billed by the IRS are erroneous. This OIC is generally used if a taxpayer was unable to defend himself against an assessment by the IRS, and has now discovered additional evidence to prove that the amount being billed is wrong.
3. The settlement would promote effective tax administration. This type of offer requires the taxpayer to explain his exceptional circumstances, showing why requiring the payment of the tax liability in full would either create an economic hardship or would be unfair and inequitable.

A successful Offer in Compromise can provide to the taxpayer such significant benefits as:

• The IRS will hold collections while the OIC is being considered;
• Tax liens will be released once the o OIC is completed;
• OIC allows the taxpayer to stay out of bankruptcy, and even reduce taxes that would not have been dischargeable in bankruptcy.

There are also downsides of the Offer in Compromise process. The main negative features of making an OIC are as follows:

• The taxpayer must make a full financial disclosure to the government;
• Certain tax benefits will be waived if OIC is accepted;
• A federal OIC does not resolve state taxes or any other debts.

The acceptance of the IRS Offer in Compromise requires that the taxpayer must remain current on all tax obligations for a period five (5) years. That means the IRS might revoke the OIC, if the taxpayer's OIC is accepted and paid in full, but he later fails to pay current income taxes or other taxes.

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The 10 most important things you need to know about Offers in Compromise

In order to qualify to file an OIC, you must have filed all of the tax returns you are required to file; however, you do not have to make payment on those filed returns. In the case of self-employed individuals, “compliance” means filing and full payment for two consecutive quarters.

The settlement procedures depend on how much is collectible from you. It has nothing to do with how much you owe to the IRS . For example, a $4 million tax liability could be settled for $1,000 if you are only collectible for $1,000.

For collectibility, the IRS looks at both assets and income.

In analyzing income, the IRS is required to allow you to offset your income with reasonable and necessary living expenses (e.g., housing, food, transportation, heath care, court ordered payments, child care, etc.).

The IRS will discount assets to their “quick sale” value. In the case of real estate, cars and other fixed assets, the IRS discount is at least 20% in almost all cases.

If you disagree with an IRS determination by an Offer Specialist, the offer can be appealed to an IRS Office of Appeals. The appeal conference is informal.

If the IRS is actively pursuing a collection action against you (either a levy, lien or garnishment of wages) , you can appeal that collection action in what is called a Collection Due Process Appeal. During that Appeal hearing, you can offer an Offer in Compromise or an Installment Agreement as an alternative to the collection action.

All tax liabilities of individuals and corporations can be compromised, including payroll tax liabilities and tax liabilities for tax fraud, and any tax liability not dischargeable in bankruptcy.

The Congress requires the IRS to have a “liberal acceptance” policy for offers in compromise. The legislative tax policy for offers-in-compromise is to give taxpayers a “fresh start.” The IRS adopts that tax policy.

A tax liability can be settled, even if you are collectible for the full amount of that tax liability, if you can demonstrate “special circumstances” for those assets or income. This can be done if the settlement is important for “effective tax administration."

 

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