Why can't I just deal with the IRS myself?
Actually, you can attempt to resolve your tax issue yourself, but it is a very difficult process. First, there's the frustration of dealing with endless complicated forms and publications...and long waits on hold. Then there's the issue of knowing how to negotiate with revenue officers. It's important to note that over 85% of offers are rejected by the IRS, simply because the average person doesn't understand the process. The experts at Progressive Tax have decades of experience handling all kinds of tax issues, so you can be assured we'll negotiate the best settlement possible.
Do I have to appear before the IRS in person?
No. One of the benefits of hiring Progressive Tax is that not only do you not have to meet face to face with the IRS, you won't even have to speak with them on the phone. Our firm will be your personal liaison with the IRS.
What can I do about all the penalties and interest?
In some cases Progressive Tax can argue for an abatement of all penalties and associated interest. Call us for a free consultation to see if you qualify.
What are my options if I can't reach an agreement with the IRS?
The IRS is always interested in reaching some sort of settlement with delinquent taxpayers. Keep in mind, it's not their goal to make your life miserable by garnishing your wages and levying your bank accounts. It's to get you into compliance and collect as much money as they can, as quickly as possible.
What if I can't pay all my back taxes at once?
Most people can't. This is, after all, why most of our clients are in the position they're in. It is our function to lower the amount of taxes owed and work out an affordable monthly payment, while at the same time protecting your assets.
What can I do about the tax liens?
Depending upon the size of the tax lien that's secured, the debtor can move to pay it off if he has, or can borrow, the funds. Sometimes this can be done by direct negotiation with the tax agency to agree on the secured value of the lien.
Other times, the debtor may have to resort to bankruptcy options, such as paying off the value of the secured debt in a Chapter 13 plan. This also may require an action in court to determine the value of the collateral, and hence the equity to which the tax lien attaches. Sometimes a challenge to the validity of the lien, may be available, if grounds exist, such as:
The notice of tax lien was never recorded, although the tax agency says it was.
The notice was recorded after the automatic stay took effect.
The notice was filed against assets that do not belong to you.
The lien was based on an invalid assessment.
The lien expired. The life of the lien is ten years, unless re-recorded.
How long does it take to negotiate a settlement with the IRS?
It usually takes about 7 months to settle with the IRS. First we need to gather evidence for the case, which would include financials for an Offer in Compromise and a narrative for penalty abatement. This takes approximately one month. Then we submit the offer to the IRS for review and to verify the financials. This takes about 3 or 4 months, after which the IRS will either accept or reject the offer. If the offer is rejected, it takes about 2 months to appeal the judgment.
When can I get the liens on my property removed?
The tax liens on your property and credit will be removed within 30 days of the satisfaction of your settlement.
What should I do if it's been several years since I last filed?
Actually, you can attempt to resolve your tax issue yourself, but it is a very difficult process. First, there's the frustration of dealing with endless complicated forms and publications...and long waits on hold. Then there's the issue of knowing how to negotiate with revenue officers. It's important to note that over 85% of offers are rejected by the IRS, simply because the average person doesn't understand the process. The experts at Progressive Tax have decades of experience handling all kinds of tax issues, so you can be assured we'll negotiate the best settlement possible.
Is the IRS required to give me a payment plan?
If you owe the IRS less than $10,000 of tax and it can be paid in 5 years, you have the legal right to a payment plan. The IRS also has a streamlined plan that can be arranged if you owe a total of less than $25,000 including penalty and interest, and if it can be repaid in 5 years. This is not a legal right, but it is IRS policy. The professional cost to secure one of these should be a low fixed fee.
After we settle, will I be in good standing with the IRS?
Yes. For the next five years, however, you must remain in compliance with the tax laws. This means you must file and pay all subsequent tax returns in a timely manner. You must also make timely estimated tax payments if required.
Will an Offer in Compromise show up on my Credit Report?
NO. Unlike a bankruptcy or credit card charge off, an Offer in Compromise does not get reported to the credit reporting agencies. An offer in compromise will not negatively affect your credit score. However, ignoring the problem will cause the IRS to file a notice of federal Tax Lien, with your county recorder, which WILL show up on your credit report.
How is the amount of the offer calculated in an Offer in Compromise?
There are two parts to the formula. The first is the equity in assets you own, the second is based on the income you have available each month after paying for allowable expenses, multiplied by a factor of 48 or 60.
Friday, December 29, 2006
Are you an innocent spouse? read this...
Both spouses are usually liable for tax owed to the IRS on a joint tax return but one spouse may be able to avoid tax liability to the IRS through the application of what has come to be known as the "innocent spouse doctrine." Under this tax doctrine, a spouse may be excused from tax liability to the IRS for tax and/or tax penalties.
The 1998 tax law broadened the definition of "Innocent Spouse Relief" so that relief from IRS tax liability is now more available for those spouses who filed tax returns jointly, yet the circumstances demonstrate that it would be unfair for the IRS to hold both spouses equally responsible for the joint tax liability. In many of these tax cases, a spouse is relieved of responsibility to the IRS for tax, interest, and tax penalties on a joint tax return. This is called innocent spouse relief.
Many married taxpayers choose to file a joint tax return with the IRS because of certain tax benefits this filing status allows. Both taxpayers are jointly and individually responsible to the IRS for the tax and any interest or tax penalties due on the joint tax return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible to the IRS for any tax amounts due the IRS on previously filed joint tax returns. One spouse may be held responsible to the IRS for all the tax due even if all the income was earned by the other spouse.
In order to help taxpayers that are being subjected to IRS problems because of their spouse's actions, the IRS has come up with guidelines for innocent spouse tax relief where a person may qualify as an innocent spouse.
This means that if a taxpayer can prove they fit in those guidelines, they may not be subject to the taxes caused by their spouses or ex-spouses.They may qualify for innocent spouse tax relief.
You must meet all of the following conditions to qualify for innocent spouse relief.
You filed a joint tax return with the IRS which has a substantial understatement of tax directly related to grossly erroneous unreported taxable income or the incorrect tax deductions, tax credits or tax basis of your spouse. Unreported taxable income is any gross taxable income item received by your spouse that is not reported on the tax return to the IRS. Incorrect tax deductions, tax credits or tax basis are any tax deductions, tax credits or tax basis of property claimed by your spouse on the tax return filed with the IRS for which there is no basis in fact or tax law.
You establish that at the time you signed the joint tax return and filed it with the IRS you did not know, and had no reason to know, that there was a substantial understatement of income or tax.
Taking into account all the facts and circumstances, it would be unfair for the IRS to hold you liable for the understatement of tax.
Courtesy of Progressive Tax Group
The 1998 tax law broadened the definition of "Innocent Spouse Relief" so that relief from IRS tax liability is now more available for those spouses who filed tax returns jointly, yet the circumstances demonstrate that it would be unfair for the IRS to hold both spouses equally responsible for the joint tax liability. In many of these tax cases, a spouse is relieved of responsibility to the IRS for tax, interest, and tax penalties on a joint tax return. This is called innocent spouse relief.
Many married taxpayers choose to file a joint tax return with the IRS because of certain tax benefits this filing status allows. Both taxpayers are jointly and individually responsible to the IRS for the tax and any interest or tax penalties due on the joint tax return even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible to the IRS for any tax amounts due the IRS on previously filed joint tax returns. One spouse may be held responsible to the IRS for all the tax due even if all the income was earned by the other spouse.
In order to help taxpayers that are being subjected to IRS problems because of their spouse's actions, the IRS has come up with guidelines for innocent spouse tax relief where a person may qualify as an innocent spouse.
This means that if a taxpayer can prove they fit in those guidelines, they may not be subject to the taxes caused by their spouses or ex-spouses.They may qualify for innocent spouse tax relief.
You must meet all of the following conditions to qualify for innocent spouse relief.
You filed a joint tax return with the IRS which has a substantial understatement of tax directly related to grossly erroneous unreported taxable income or the incorrect tax deductions, tax credits or tax basis of your spouse. Unreported taxable income is any gross taxable income item received by your spouse that is not reported on the tax return to the IRS. Incorrect tax deductions, tax credits or tax basis are any tax deductions, tax credits or tax basis of property claimed by your spouse on the tax return filed with the IRS for which there is no basis in fact or tax law.
You establish that at the time you signed the joint tax return and filed it with the IRS you did not know, and had no reason to know, that there was a substantial understatement of income or tax.
Taking into account all the facts and circumstances, it would be unfair for the IRS to hold you liable for the understatement of tax.
Courtesy of Progressive Tax Group
Don't be late on your taxes...
You generate tax problems when you don't file your income tax returns. After ignoring many notices to file a tax return, the IRS will prepare one for you, called a Substitute For Return (SFR).
The IRS uses income that has been reported to them, such as wages, interest income, subcontractor payments, sale of property, etc., and then assumes you are single, have no dependents, and uses the standard deduction.
Now you have a larger tax bill, even though you didn't actually file a tax return. You also have created other problems. You can't get an installment agreement without filing the missing returns, even the SFR's. You can't submit an Offer in Compromise if there are missing returns. Bankruptcy won't clear off old years if those returns were not filed by you. And the IRS will continue to try to collect on the SFR billings.
While there are many reasons why a taxpayer may not file a tax return, you need to aware of the following:
Failure to file tax returns may be construed as a criminal act by the IRS.
This type of criminal act is punishable by one year in jail for each year not filed.
Needless to say, it's one thing to owe the IRS money, but another thing to potentially lose your freedom for failure to file a tax return.
The IRS may file "SFR" (Substitute For Return) Tax Returns for you. This is the IRS's version of an unfiled tax return.
Because SFR returns are filed in the best interest of the government, the only deductions you'll see are standard deductions and one personal exemption.
You will not get credit for deductions which you may be entitled to such as exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, etc.
The IRS uses income that has been reported to them, such as wages, interest income, subcontractor payments, sale of property, etc., and then assumes you are single, have no dependents, and uses the standard deduction.
Now you have a larger tax bill, even though you didn't actually file a tax return. You also have created other problems. You can't get an installment agreement without filing the missing returns, even the SFR's. You can't submit an Offer in Compromise if there are missing returns. Bankruptcy won't clear off old years if those returns were not filed by you. And the IRS will continue to try to collect on the SFR billings.
While there are many reasons why a taxpayer may not file a tax return, you need to aware of the following:
Failure to file tax returns may be construed as a criminal act by the IRS.
This type of criminal act is punishable by one year in jail for each year not filed.
Needless to say, it's one thing to owe the IRS money, but another thing to potentially lose your freedom for failure to file a tax return.
The IRS may file "SFR" (Substitute For Return) Tax Returns for you. This is the IRS's version of an unfiled tax return.
Because SFR returns are filed in the best interest of the government, the only deductions you'll see are standard deductions and one personal exemption.
You will not get credit for deductions which you may be entitled to such as exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, etc.
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