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With IRS audits and aggressive IRS collection tactics on the rise, taxpayers need to avoid IRS tax problems including tax evasion schemes in the first place so they won’t need to hire a tax lawyer later.

Tax evasion should not be confused with tax avoidance. Avoidance is legal; evasion is a crime.

Tax Avoidance is when someone works within existing laws to pay the least amount of taxes that the IRS says are due. Recent examples of tax avoidance in the news involve both Apple and Google (as reported yesterday in the Huffington Post in an article titled “Apple, Google Tax Avoidance Looms Over Upcoming EU Summit“).

Tax Evasion encompasses any intentional cheating of the government in taxes. It can also carry a five-year prison sentence and IRS penalties of up to $100,000. You don’t have to be a tax lawyer to know the following red flags can cause the IRS to suspect tax evasion:

• Intentionally failing to report business cash receipts, including cashed checks. Important: There are specific IRS audit programs to investigate this activity.
• Failure to file FBAR reports and report offshore bank accounts.
• Income reported on last tax return far exceeds the previous years.
• Filing fraudulent tax returns for others and accepting payment for your “services.”

Tax Attorneys Avoid IRS Problems by Following the Law – Taxpayers interested in reducing their IRS tax bill will do well to take advantage of legal tax deductions to save money. Getting involved in risky tax schemes to save money will end up making you an IRS target for further examination (audit). Tax lawyers avoid tax problems at all costs.

If you are under audit or have IRS tax debt knowing what your options are and taking care of your tax issues with a qualified tax professional is the best defense against the IRS. Working with IRS problem solvers such as certified tax resolution specialists or tax lawyers, can greatly increase your chances of successfully resolving your IRS tax problems for good.

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Kirk Roberts, 49, Salina, Kansas, was also ordered to pay $153,510, the full amount of taxes he owes.

He pleaded guilty to three counts of filing false income tax returns for tax years 2006, 2007 and 2008. In his plea, he admitted that while he was the owner of Wild, Wild West Inc., a strip club in Salina, he failed to report cash receipts totaling $537,942. As a result, he underpaid his federal income taxes by $153,510.

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Citing a TMZ article, the Source reports that Knowles failed to pay $485,575.95 in taxes in 2010 and $728,004.89 in 2011. His total IRS tax debt is a whopping $1,213,580.84.

This information is not meant to make light of Mr. Knowles’ serious tax situation. It’s to demonstrate that when it comes to paying taxes, the IRS does not give special treatment to celebrities or the wealthy.

Taxpayers who owe more than $20,000 to the IRS need to know they are not alone in having IRS issues – nearly one in six Americans has a tax problem. The good news is that there are options struggling taxpayers can take today to get the tax relief they need. The first step is to contact a certified tax professional or IRS tax attorney for a free consultation to find out what your options are. These IRS problem solvers will look for solution to potentially reduce what you owe, and lift the tax burden from your shoulders to help resolve your IRS tax issues for good.

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The IRS Gets Scrutinized – By far the biggest IRS story this week revolved around the IRS itself! The agency is being closely examined for unfairly targeting conservative and tea party groups for extra scrutiny of their 501(c)(4) tax exempt status. As I sorted through the blizzard of articles of varying opinions, I found the following two interesting reads:

• Via @BostonGlobe IRS says audits of conservative groups out of line
• Via @AccountingToday Outgoing IRS Chief Miller Denies Targeting at Congressional Hearing

Tax Fraud - The post Tax Case: Louisiana Lawyer Files False Tax Refund Claim explains the case of Louisiana lawyer, Francis C. Broussard, 53, of West Monroe, La., who pleaded guilty to making false, fictitious and fraudulent claims to the IRS in an attempt to receive more than $9.7 million in tax refunds. For these false claims, Broussard faces up to five years in prison and a $250,000 fine.

Offer in Compromise Program Can Provide Needed Tax Relief – A client question titled: “IRS Question: How Do I Qualify for the Offer in Compromise Program?” The Offer in Compromise (OIC) is a helpful tool for consumers who owe a substantial amount to the IRS but who would not be able to pay off their tax debt, and lack the earnings to do so even over time. However, not everyone qualifies for the program. A qualified tax professional can determine eligibility, exactly how much money the taxpayer owes, and then negotiate an IRS tax settlement on their behalf – resolving their tax debt for good.

Tax Client Saves Over $100,000 Through IRS Offer in Compromise – This month’s clients, Mr. & Mrs. Ford Sr. owed the IRS $112,000 in back taxes when came for tax help. The Fords were good candidates for an Offer in Compromise and through that program; they saved over $108 thousand dollars!

IRS Question: Can I Erase Tax Debt in Bankruptcy? This question is one I hear a lot. Financially distressed consumers are turning to bankruptcy as a means of getting rid of tax debt. While the IRS does not like to mention bankruptcy as a way to remove tax liabilities, many taxes, IRS penalties and interest qualify for complete discharge in bankruptcy. The good news is that struggling taxpayers have some tax relief options. Here are some points to remember about bankruptcy:

• If your entire debt consists mostly of creditors you are having difficulty paying and very little IRS debt, bankruptcy may be your best option.
• If your major creditor is the IRS, the Offer in Compromise program may be a better option than tax relief bankruptcy. A tax attorney or Certified Tax Resolution Specialist can help you consider all options and solutions like an IRS installment agreement that may work better for your financial circumstances.

Criminal Investigations Are Going Up – The post: IRS Criminal Investigation Report Shows Increases highlights the release of the Annual IRS Criminal Investigation (CI) Report for 2012 that shows strong increases in enforcement actions and IRS penalties imposed on convicted tax criminals. It’s no coincidence the number of CI cases has increased in the last few years – the government needs money and has given the IRS the authority to go after tax cheats with a vengeance to collect. All the more reason to resolve IRS tax issues before they get to the criminal stage.

Have a great weekend!

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According to court records, Francis C. Broussard, 53, of West Monroe, Louisiana, had his accountant prepare his 2005 through 2007 tax returns — but Broussard never filed them.

In 2009, Broussard went to a different tax preparer to have his personal tax returns prepared for 2005 through 2008. Broussard brought already-prepared federal tax returns along with a separate piece of paper with a set of numbers on it. He instructed the preparer to file the return based on his numbers, which claimed a multimillion-dollar refund.

Broussard faces up to five years in prison and a $250,000 fine.

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Answer: The Offer in Compromise is a great program for consumers who owe a substantial amount to the IRS but who cannot pay off their tax debt, even if given time. There are many reasons taxpayers find themselves in such a situation — medical problems, career change, poor financial decisions, etc.

No matter the reason, the Offer in Compromise can provide a great way to settle your tax debt once and for all, assuming you qualify for the program. Now, when I talk about the Offer in Compromise, I think it helps to explain the context and why the IRS allows consumers to submit compromise offers.

For years, the IRS was known for its aggressive, maybe even call it “bare-knuckled,” approach to tax collection. But the tax-collecting agency soon realized that knocking on doors to collect taxes wasn’t as effective as being flexible. Enter the Offer in Compromise.

For taxpayers who qualify — and you must show that you lack the earnings and assets to pay off your tax debt, even over time — the Offer in Compromise allows consumers to negotiate a settlement offer that eliminates their tax debt once and for all. A successful Offer in Compromise can reduce your tax debt by a significant amount.

It’s impossible to tell if you qualify for the program based on the information you provided alone. So your first step should be to consult a qualified tax professional who will analyze your previous returns with a fine-toothed comb, determine exactly how much money you owe, and then take your case to the IRS and negotiate on your behalf for the Offer in Compromise.

At Tax Resolution Services, we are IRS problem solvers. For a free, no-risk consultation, please call our office at (888) 699-7630.

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Answer: This is a great question, and one I am asked often. With the recession in its fifth year, financially distressed consumers like you are turning to bankruptcy as a means of wiping their financial slate clean including getting rid of tax debt. The good news is that you do have some tax relief options regarding bankruptcy discharges of tax debt. There are three general rules that must be met in order to discharge income taxes:

1. The tax liability must be 3 years old or older from the “due date” of the return, including extensions.
2. The tax returns themselves (Substitutes for Returns are not eligible for discharge) had to have been filed at least 24 months before the petition date.
3. 240 days must pass from date of assessment. There are certain events that can “toll” (stop) the 240 day “clock”.

While not all bankruptcy cases result in a complete discharge of debts; there are instances where IRS tax debt can be discharged through tax relief bankruptcy.  Here are some guidelines for you to consider, including other means of debt relief that bankruptcy:

IRS Tax Debt Erased in Bankruptcy-Strict Rules Apply

The IRS does not like to mention bankruptcy as a way to remove tax liabilities, but many taxes, IRS penalties and interest qualify for complete discharge in bankruptcy. The catch: there are strict rules governing this. Changes to the Consumer Bankruptcy Law in 2005 affect the ability to discharge income taxes. As a result, the IRS uses rigorous criteria to determine if the taxpayer’s income tax liabilities qualify for forgiveness.

Bankruptcy Is Not the Only Option

If tax issues are not your main issue, the Offer in Compromise program may be a better option than tax relief bankruptcy. Here are some guidelines to consider:

• If your entire debt consists mostly of creditors you are having difficulty paying and very little IRS debt, bankruptcy may be your best option.
• If your major creditor is the IRS, a tax attorney or Certified Tax Resolution Specialist can help you consider options like an IRS installment agreement or offer other solutions that may work better for your financial circumstances.

Resolve Tax Bankruptcy-Hire Expert Tax Representation

Bankruptcy is a complicated, legal matter that should be seriously considered because your financial life is on the line. I would encourage anyone faced with bankruptcy to seek out experienced legal counsel such as a tax attorney or Certified Tax Resolution Specialist with expertise in handling tax relief bankruptcy cases. These qualified tax professionals will assess your tax liabilities and determine if you are eligible for a full discharge. If that is not a viable option, they will also suggest other IRS solutions to help you get your financial life back on track.

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Richard Weber, Chief of Criminal Investigation believes the key to CI successes is “perseverance and dedication to working complex financial investigations aimed at stopping tax fraud, identity theft, offshore tax evasion, public corruption, money laundering and other financial crimes.”

Here are some highlights from the 28 page report:

• Initiated investigations and prosecution recommendations: both up nearly 9 percent in fiscal 2012 compared to 2011.
• Filings of indictments and other charging documents: up 13 percent.
• Convictions and those sentenced both gained roughly 12 percent from the prior year.
• Criminal investigation initiations totaled 5,125 cases in fiscal 2012
• Completed investigations were 4,937 – up 5 percent from fiscal 2011.
• Convictions totaled 2,634 in fiscal 2012.
• The conviction rate saw a slight increase to 93 percent.

It’s no coincidence the number of CI cases has increased in the last few years. Due to the prolonged recession, the government needs money and has given the IRS the authority to go after tax cheats with a vengeance to collect. All the more reason people with IRS tax issues need to come forward to resolve them before they get to the criminal stage.

If you have significant tax debt, have unreported offshore bank accounts, or are under audit, don’t face the IRS alone – you are out of your league. Your best defense will be to consult a certified tax resolution specialist, tax audit expert, or tax attorney to navigate the complicated IRS waters and help you negotiate an IRS tax settlement that lets you get on with your life.

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This month’s Tax Client Of The Month is Mr. & Mrs. Ford Sr.

Mr. & Mrs. Ford Sr. owed the IRS $112,000 in back taxes when he sought help.  After several months of negotiations, we were able to settle his debt for just $3,662 through the IRS’s Offer in Compromise program*.

You might be our next Tax Client Of The Month too!  Watch for your name in our tax blog in an upcoming month.

Thanks for the Kind Words from our Tax Client of the Month:

“I just wanted to write and let you know how much I appreciate all the hard work you did in solving my IRS Problems.  You and your staff were very professional and helpful.  I couldn’t have done it without you!”

- Mr. & Mrs. Ford Sr.

* The IRS’s Offer in Compromise program is a privilege, not a right, and not everyone qualifies for it. If you have back taxes, contact a qualified tax professional to determine if you qualify for the Offer in Compromise program. If you do not, there are other tax relief options such as the IRS Installment Agreement which is an IRS Payment Plan.

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