1. Foreign accounts and assets. If you have money or assets overseas, the IRS wants to know about it. If you have more than $10,000 in a foreign bank account, you’re required to file an annual disclosure statement with the Treasury Department. In addition, the IRS is now requiring foreign banks to enter into information sharing agreements, or else have 30% of payments transferred to them from the U.S. withheld to pay potential tax bills. The failure to disclose your overseas assets can result in significant penalties, and potentially criminal prosecution.

2. Payroll taxes. The majority of my clients over the past four years have been small businesses that owe back payroll taxes to the IRS. The single biggest emphasis of enforcement within the employment tax arena has to do with taxpayers that pyramid their employment tax liabilities, meaning that they owe money, and continue to accrue new liabilities each quarter. The IRS is also heavily targeting the owners of S-corporations that don’t pay corporate officers a fair wage (and thus payroll taxes0, but rather take nothing but distributions (which are not subject to payroll taxes).

3. Gift tax audits. Many people don’t realize that giving cash gifts to their friends and family can have tax consequences. Every person has a lifetime cumulative exemption from gift taxes, and there are also annual limits. The IRS has actually started to electronically examine property transfers based on public records in order to ferret out people that may owe gift taxes.

4. Automated Substitute for Return Program. Section 6020(b) of the Internal Revenue Code allows the IRS to file a tax return for you if you fail to do so. They prepare this Substitute for Return (SFR) based on information they have on file, such as W-2 and 1099 information sent to the IRS by your employer. A computerized system now prepares these returns, and the IRS has asked Congress for the past several sessions to make it a felony when you fail to file a tax return for three out of five straight years and the tax exceeds $50,000. This hasn’t made it’s way through Congress yes, but expect it to after the election year is past.

5. Schedule C audits. The IRS just spent several years and millions of dollars to analyze the tax returns of small businesses that file a Schedule C (sole proprietors and self-employed individuals). Based on this analysis, they have developed a set of criteria for attempting to determine who is either under reporting self-employment income, or overstating their expenses. The IRS believes that the biggest piece of the “tax gap” comes from the self-employed, and they’re probably correct in that assumption. They are now heavily scrutinizing Schedule C’s attached to personal income tax returns and increasing audits against self-employed folks that raise any red flags.

Knowing what the IRS is focusing on can help you make decisions about how to handle your own tax situation. After reading this, perhaps you’ll consider forming a corporation, partnership, or LLC in order to run your business, rather than operating as a sole proprietorship. Or perhaps you will give consideration to paying yourself a salary out of your S-corp, or think twice about how you send money to an overseas account.

Never forget that, no matter what, the tax code doesn’t require you to pay one single penny more to the IRS than you have to. Even if you are the subject of one of these increased enforcement measures, you still have rights, and if you did everything right, then you have nothing to worry about. If something somehow did fall through the cracks, you still have rights, and their are ways to get things straightened out — never forget that!

Until next time,

Jassen Bowman, EA

There are two distinct collections units within the IRS. The first is the Automated Collection System (ACS), which consists of computerized lien filings, automated send out of bills and notices on set intervals, and the call center agents that perform basic collections functions. It is important to understand that the people you’re talking to on the phone at ACS are generally not very highly trained individuals, and have very limited authority. They are trained to do their jobs, and that’s really about it. In fact, speaking with ACS representatives is on par with speaking to a customer service representative at your cell phone provider, and can be equally as frustrating if you get somebody that just can’t wait to go home for the day.

The other distinct collection unit within the IRS is the Collection Field function. Field agents, called Revenue Officers, are located in cities and towns across the country. Rural Revenue Officers may actually work from home and have a field territory covering hundreds of miles, while thousands of agents in big cities have extremely small territories and may hardly ever leave their Federal Building.

Revenue Officers are required to do many things in order to “resolve” a tax liability placed under their control. They are required, by law and regulation, to collection certain information, verify things through whatever means available, and close out cases. Over the course of the past year and a half or so, I have personally noticed a significantly reduced emphasis on simply reducing the number of open cases, and instead increasing cash collections through whatever means necessary.

In order to demonstrate to IRS management that they are doing their jobs properly, here are some of the biggest actions that Revenue Officers are required to perform (and document in their files):

• Make sure you’ve filed every past tax return you should have (and if not, make you do so)
• Verify that you are making payments on time and in full for any new taxes you have come up, such as employment taxes or estimated tax payments (and if you’re not, making sure that you do)
• Collect detailed financial information from you concerning your income, expenses, assets, and other debts
• Based on that financial information, determine sources of money from which the government can collect on the tax debt (this can include forcing you to apply for loans against property with equity or tapping into retirement accounts)
• Place you into whatever program you qualify for in order to address the tax liability, such as a monthly payment plan, reduced settlement, or even giving you a grace period of a year or two in which they close your case (but you still owe the debt, and it grows)
• Make sure you don’t accumulate any new tax debts
• Physically visit your home or business at least once in order to determine if you’re hiding anything (free and clear Hummer sitting in the barn — it’s happened)
• If you are a business and owe employment taxes, determine whom to assess the Trust Fund Recovery Penalty against on a personal level, and do so
• If you are not meeting deadlines or they believe you are stalling, hiding money, or have an ability to make payments and you’re simply not, then to issue levies and take money from your bank account, paycheck, customers, etc.

All IRS collections employees keep meticulous notes whenever they talk to anybody (hint: so should you!). It’s not uncommon for an IRS Collections file to be hundreds of pages of material, even for what might seem like a relatively small case.

All in all, don’t forget that the IRS Collections division has one priority: To collect money. Hopefully, having a little bit better understanding of how they work cases will help you in resolving your own IRS matters.

However, their largest creditor, which appears to have had a claim against the company exceeding $11 million, has decided not to allow them to restructure the debt, and has instead seized all the companies cash and assets in a liquidation of the company.

This means that, within the past 15 months or so, the 3 largest tax resolution firms in the United States have gone out of business, either by bankruptcy or government action. A little over a year ago, American Tax Relief in Los Angeles was shut down by the FTC, and the owners are facing numerous criminal charges. In early 2011, Roni Deutch was shut down by the California Attorney General, and Roni herself was disbarred and faced perjury charges.

JK Harris has been the target of several class action lawsuits regarding their sales practices and poor customer service. They have also been investigated by the Attorney General’s for several states.

If the closing of JK Harris has left you in a bad place regarding your tax matters, please contact me (click the “Ask A Tax Question” link at the top of this page, or call my office at (970) 930-1040) and I can steer you in the right direction.

What sort of things should somebody do as part of conducting
their “due diligence”?

First of all, visit the Better Business Bureau at www.bbb.com
and look for any complaints or outstanding issues that they
have with clients.

Second, you may actually want to turn to an unlikely source
for information on certain companies: Your IRS Revenue Officer.
Revenue Officers will not provide an unbiased opinion, of course,
and many of them will even tell you not to secure representation
(which is a violation of IRS policies for them to say, but they
still do it). However, your RO has probably worked with most
of the large, national tax resolution firms and can give you
their personal opinion on the firm if you ask.

Third, before signing a contract for taxpayer representation,
be sure to confirm that the firm that will provide your
representation will assign your case to a licensed representative.
You should be guaranteed that your representative is a licensed
attorney, licensed certified public, accountant, or a licensed
Enrolled Agent, before you sign any contract. The IRS will not
allow non-licensed representatives to negotiate for a taxpayer,
but you would be surprised at how often large firms have unlicensed
assistants doing the actual IRS negotiation.

Fourth, be sure to ask if the individual selling you the tax
resolution service if they have ever been involved in actual IRS
or state tax negotiations. Many times you will get a delayed
answer because that answer is “no.” Be weary of salespersons
that will base how they can help you from a sales script. Any
case-experienced salesperson should be able to walk you
through the case proceedings from start to finish.

Understand that hiring a representative to negotiate on your behalf
is not a guarantee that your case will be resolved. You will need
to work closely with your representative to ensure that your best
interests are always held in high regard. Although your
representative should do nearly all of the interaction with the
taxing authorities, your participation with your representative is
vital to the resolution process.

You will want to confirm that the fee you are paying for the
service you are purchasing is a flat fee. If you cannot get this
guarantee in writing, it is not a flat fee. Many salespersons will
state flat fee over the phone but will not guarantee this in
writing. If you do not understand the terms and conditions of your
representative’s contract, you may be trapped into receiving
unexpected requests for additional fees. For detailed information
on this heinous industry practice, read my “tell all” report here:

http://taxhelphq.com/rewrites/

It is very important for you to keep in mind that most of the
time when you are speaking with a tax resolution firm, you are
speaking to a commissioned sales rep on the phone. These sales
reps usually have zero actual tax experience, and much of what
they tell you may have been passed to them from OTHER untrained
personnel. This is important to understand because it is not
uncommon for these salespeople to give blatantly incorrect
information to people simply so they can close a sale.

Armed with these tips, you should be better positioned to make
a wise decision regarding hiring professional tax services.

Some taxpayers may qualify for special installment agreements that require little or no financial documentation, similar to a no-doc or low-doc mortgage.

In rare circumstances, based entirely on your financial situation, you may even qualify for an Installment Agreement in which you never fully pay off the back tax liability, called a “Partial Pay Installment Agreement” (PPIA).

As part of negotiating your installment agreement, a comprehensive financial analysis of your business or personal finances will be required. The kind of information we will need to review, as mentioned above, is very similar to what would be required for a loan application. For businesses, this information includes all of the standard business accounting information, such as:

• balance sheets
• bank statements
• profit and loss statements
• accounts receivable aging reports
• asset lists & depreciation schedules

At first, many clients are apprehensive about providing this detailed financial information to a tax consultant. However, this information is necessary to perform a proper financial analysis and properly negotiate your tax resolution.

If your financial situation is such that you can legitimately only pay a a minimal amount, the IRS will likely grant the Installment Agreement, even if the payments will not fully satisfy the tax debt. For example, if you owe the IRS $60,000, and a payment plan of $200 per month is negotiated, and you have 3 years remaining until the statute of limitations runs out on collection, you will have paid in only $7,200, and then the statute of limitations runs out and you’re off the hook for the remaining balance. This is called a Partial Pay Installment Agreement (PPIA), and is nearly identical to an Offer in Compromise being paid under the Deferred Periodic Payment option. It is important to weigh the merits of the PPIA option versus the Offer in Compromise option when considering your tax resolution options. Be sure to ask your tax professional about the pros and cons of each of these options.

There are two special types of Installment Agreements that you may be eligible for based on how much you owe. If you owe less than $25,000 in income taxes (including corporate income tax), then you may be eligible for a Streamline Installment Agreement, which has less stringent qualification requirements. This is similar to a “low doc” mortgage. If you owe less than $10,000 in income taxes (including business), then you may be eligible for a Guaranteed Installment Agreement, which the IRS cannot deny and requires no financial information to be provided. This could be considered parallel to a “no doc” mortgage, and can be simple to obtain. The real beauty of these two plans is that the minimum payment can be as little as $25 per month, as long as it pays off the balance within a prescribed amount of time.

For most taxpayers, the Installment Agreement will be the resolution option you end up with. Understanding the different types of Installment Agreements and the requirements for obtaining one and staying on it are important. Discuss these requirements with your tax professional to make sure you are eligible for the payment plan and are going be be able remain on the plan once it is set up.

If you had a job and had income taxes withheld from your paycheck, but you didn’t file a return either because you didn’t have to because of your income level or because you thought you wouldn’t get the money back, you may actually be in for a surprise. It may not necessarily be a lot of money, but I believe you should even file your claim for a $1 refund merely on principle if it’s owed to you.

The IRS keeps millions of dollars every year that they are not legally entitled to keep, simply because taxpayers didn’t realize they could get the money back. In order to file a return for the express purpose of getting a refund, even if you weren’t legally obligated to file a tax return, you need to file the return and request the refund within 3 years of when the tax return was originally due, which is generally April 15th of each year for personal income tax returns. After this three year period, the government says, “Too bad, so sad” and gets to legally keep your money.

If you file a tax return late, but are due a refund, there are no penalties for late filing. They only whack you with late filing penalties if you OWE money, and then it’s a percentage of what you owe (Caution: It’s a BIG percentage if it’s been a while).

If you’re not sure if you would end up owing or getting a refund, here’s a quick tip: Most tax preparers will run the numbers through their computer for you for free, and only charge you if you actually FILE the return. Most franchises of the big tax prep retail chains (H&R Block, Liberty, and Jackson Hewitt) will do this, as will most independent tax preparers. It’s worth at least looking into.

In addition, the IRS receives millions of dollars of refund checks back in the mail every year. If you were expecting a refund check, and it didn’t come, then don’t forget to give the IRS a call (800-829-1040) and ask them where your refund is. There is also a simple and handy “Where’s My Refund?” feature on their web site, at irs.gov.

Lastly, be sure to take every tax break you’re entitled to. If you think your tax preparer either missed some deductions or skipped a tax credit that would pump up your refund (the Earned Income Credit and the Additional Child Tax Credit are two of the big ones), then don’t hesitate to take your tax return to somebody else for a second opinion. Most tax preparers will do this either for free or for a very nominal charge, so if you think you should have gotten a bigger refund, have another tax preparer look over your return.

The process of obtaining a reduction of IRS penalties is called a “penalty abatement”. While there is a form for claiming a refund of taxes paid in and requesting an abatement of some limited penalties under limited circumstances, there is no general form for requesting an abatement of penalties under special circumstances, even circumstances that meet the IRS reasonable cause criteria.

I’ve been using a very successful template letter for several years as my starting point in all my penalty abatement cases. Half the time, this letter is all I need, but it sets the groundwork for Appeals if necessary. This letter has actually been the basis for achieving millions of dollars in IRS penalty abatements.

This particular penalty abatement letter template is the result of over 100 hours of case review in search of the perfect U.S. court cases to support the arguments, and dozens more hours of tweaking and perfecting the exact language used so as to create the perfect penalty abatement letter for use with clients.

This letter does require some finesse to use, as it is meant to be used by tax professionals knowledgeable about tax code and with experience preparing penalty abatements. Because of that, I’m also going to provide you with a short “Quick Start Guide” showing you how to use this penalty abatement sample letter.

In addition, you’re also going to receive a handy guide for what to do if the IRS rejects your initial application for relief from penalties. If they reject your application, they are required to tell you why, and you also have Appeals rights that come with that rejection. It never ceases to amaze me the simple, straightforward penalty abatement applications that are initially rejected, but then accepted almost immediately by an Appeals officer.

To get instant access to the most powerful penalty abatement letter template available for a tiny investment of only $47, simply click the “Buy Now” button below and proceed to our secure payment processor.

Here is everything you receive in this offer:

• Three powerful penalty abatement sample letters
• Quick start guide to applying for IRS penalty abatements
• A handy Appeals Guide in the event your initial application is rejected
• Bonus: I’ll ship you a free copy of my new book, Tax Resolution Secrets, a $19.95 value from Amazon.com

Before you question why somebody would do something like that, there are actually numerous reasons for doing so, especially in regards to various aspects of state law. There are also business and asset protection reasons for keeping things separate. For example, if one spouse owns a business or is involved in a profession or activity with a high degree of litigation, then keeping different financial houses can be a good idea.

Here’s the answer to the question: Believe it or not, even if only one person owes the tax liability, the income (and allowable expenses) of everybody in a household must be included in an Offer in Compromise amount. This applies to everybody living in the home — even people just renting a room from you.

Now of course, we work to get the non-responsible party’s income and expenses taken off the reporting requirements, and I’ve never failed in achieving this objective. Under the tax code, the only person responsible for an IRS tax debt is the person against whom it is assessed, and nobody else.

If you need help with your Offer in Compromise, give me a call – (877) 632-5083.

If so, you are obviously aware of the recent actions against the company by the California Attorney General, which has seized all the company’s assets. In fact, Rony Lynn Deutch herself was disbarred and is facing criminal charges stemming from the AG’s investigation.

This situation has left many of Roni Deutch’s customers in a bind. If you are one of them, we understand and want to help you out. My name is Jassen Bowman, and I’m an IRS-licensed Enrolled Agent. I’ve been in the business for several years, and your case will be handled by myself personally. If you were left hanging by Roni Deutch, I’ll not only give you a huge break on fees, and also work something out so that you can pay the fee over time.

Call me directly at (877) 632-5083 so we can discuss your situation, and mention Roni Deutch.

Most companies charge some sort of initial service fee, but then “re-write” you for additional services on the same tax matter.

Tax Help HQ is now offering flat fee tax resolution service. What does this mean? We will negotiate a payment plan or settlement, handle all the appeals, apply for penalty relief, and all the tax resolution negotiations required to settle any Federal tax issue for one person, couple, or business — all for one low, flat-fee — Contact us today for a quote!