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Tax Knowledge

Are You Part of the “IRS Tax Lien Explosion”?

Reading this article can leave the typical taxpayer feeling a little nervous. If you’ve already had trouble with the IRS, or are currently trying to resolve tax problems, that article, which charts the dramatic increase in IRS tax liens, might make you very nervous indeed!

The IRS Is Stepping Up Tax Enforcement Efforts

Earlier this month, National Taxpayer Advocate Nina Olsen released her annual report to Congress. The Advocate expressed continuing concern that the IRS’s increasing use of hard-core enforcement actions, particularly tax liens, is inflicting unnecessary harm on financially struggling taxpayers.

Over the past seven years, the IRS has filed more than five million tax liens. 1.1 million liens were filed in 2009! The impact of these liens is tremendous. The individual tax payer will have their credit negatively impacted, making it harder for them to borrow money to buy a house, car, or fund a child’s education. A tax lien can affect a taxpayer’s employability. Not every company is willing to hire someone who’s had trouble with the IRS.

What To Do About Your IRS Tax Lien

If you have received a notice from the IRS about a potential or impending federal tax lien, don’t panic! There is hope for your situation. Begin by realizing you need to get help right away! Resolving tax problems requires expert, experienced assistance. Don’t try to go it alone!

There are many routes to settling old tax debt and eliminating federal tax liens. Don’t trust anyone who claims to know the solutions to your tax problem before they understand your unique circumstances! Every tax problem is different. You want a qualified tax professional to work with you to discover the best way to resolve your tax issues.

Is An IRS Audit The Last Word? Not Necessarily!

Audit Appeals

Once you receive the results of an IRS audit – which generally includes a large bill that you have to pay – you have three options.  You can pay the bill, request an informal review with the auditor’s group manager, or file a formal request for appeal.

If you went through the initial audit without help or representation, NOW is the time to get professional help. Have a licensed tax professional review your situation.  There are many factors that go into deciding whether or not an audit stands or is overturned upon appeal.

Bear in mind that IRS auditors are trained to get information out of the taxpayer. The tactics they use are often frightening, especially to the taxpayer who doesn’t know what rights and protections they have.  An IRS auditor is not going to volunteer the information that their decisions can be questioned – or even overturned!

Appealing An IRS Audit Successfully

Appealing an IRS audit is difficult, but it is not impossible.  Prepare yourself for success by having competent, professional tax assistance from an audit accountant, licensed tax professional, or other expert. The vast majority of audits that are overturned or altered significantly upon appeal have a tax professional involved.  An individual taxpayer, particularly one with no tax experience, is at a significant disadvantage when they try to appeal on their own.

The primary advantages of having a tax professional represent you in appealing an IRS audit is that it introduces a significant degree of separation between you and the IRS as well as having someone with years of experience in dealing with the IRS on your side.  The IRS will be talking to your tax accountant, not you.  The phone calls will go to the tax professional’s office – not your home!  This eliminates stress and gives you the peace of mind that the problem is being handled. Your tax professional’s experience will also get you a better result than you could have gotten on your own since he knows how the IRS operates, what your rights are, and how to maneuver through the IRS maze.

Preparing for Tax Season 2011: What To Do If You Have Outstanding Tax Problems

It’s that time of year again, when newspapers and websites are full of information about what you need to do to get ready for the upcoming tax season.  There’s lots of websites that offer free tax preparation, agencies that coordinate volunteer tax preparers and do-it-yourself guides that promise to reduce even the most complex return into a quick and easy refund check.

It sounds like good advice – but is it good for you?

The answer is a qualified “It depends!”  Many of the resources you’ll find listed in articles like these are great for taxpayers who have simple returns and are current with their tax obligations. However, if you’re currently embroiled in negotiations with the IRS or have tax issues that you haven’t addressed, you need professional assistance.

Finding Help For Your Tax Problems

The best way to help yourself resolve your tax problems is to work with a qualified tax professional.  You have to be honest with these people and let them know the full magnitude of what they’re dealing with.  Don’t withhold information for fear that the tax professional might ‘judge you’ – there’s nothing that they haven’t heard before!

Often times, people think that their tax problem is so unique and one of a kind that nothing could be done to resolve it.  Nothing can be further from the truth! Every tax problem has a solution.  You just need to work with someone who knows how to find it!

This year, the deadline for filing your 2010 federal tax return is April 18th.  That means you have just over one hundred days to get ready to send your return and any payment due to the IRS.  You also have one hundred days to start addressing your outstanding tax issues. Don’t wait until the last minute — there’s nothing harder to find than a tax expert with a free moment on April 15th!  You deserve expert assistance with your tax problems.

No Pardon for Billy the Kid: What About YOUR Tax Problems?

New Mexico Governor Bill Richardson has just announced that he will not pardon Billy the Kid, citing a lack of conclusiveness and historical ambiguity surrounding the pardon allegedly promised to Billy by then governor Lee Wallace.   The value of a pardon to Billy is of some question, as he has been dead for quite a while now. If he was hoping for official state forgiveness from some spectral perspective, surely he is disappointed but not surprised — many commentators had said the pardon didn’t have a ghost of a chance.

Massachusetts Tax Help

Why did the effort to pardon Billy the Kid fall apart?  Some of the issue is the lack of clear documentation about what happened around Billy’s case.  A lack of documentation can be a big problem for tax payers as well: without the right records and proof of your income, expenses, and more, it’s difficult to defend yourself against allegations from the IRS and state tax authorities.  If they say you’re not in compliance, and you have no proof to the contrary, are you out of options?

Did you know that the IRS keeps records about every taxpayer?  The Freedom of Information Act, passed by Congress in 1966 and updated three times since, entitles you to a copy of the file the IRS has on you.  Getting a copy of this file can be essential in helping you determine the best way to resolve your tax issues.  Professionals such as a tax CPA or income tax attorney request and access these records all of the time to best protect their client’s interests.  You can request a copy of your file yourself, but that request from an individual taxpayer can attract unwanted attention.  Interpreting the IRS’s files is difficult and requires specialized knowledge.

You deserve qualified, experienced professional assistance with your tax problems.  You have a right to know the information the IRS keeps about you and your family!  There may be some unanswered questions about Billy the Kid’s history with the government — but you don’t need to have any unanswered questions yourself!

2011: The Year Your Tax Problems Disappear?

The New Year starts next weekend.  That means it’s time to ask yourself, “Have I had enough? Am I tired of screening calls so I don’t have to talk to the IRS? Am I tired of being afraid to check the mail? Am I tired of my employer getting embarrassing phone calls about my financial situation?”

If the answer to these questions is YES, take heart!  2011 can be the year your tax problems disappear!  Resolve to  make this the last year you have the stress, anxiety, and pressure of late tax returns, unpaid taxes, and federal tax liens weighing on your mind.  Here’s what you have to do:

Find Help for Your Tax Problems

You can’t fix your tax problems on your own. Federal and state tax codes are more complex now than they’ve ever been.  Even the people who work at the IRS have a hard time figuring out the proper answer to challenging tax questions — you can’t rely on them for guidance!  You deserve an advocate, working on your side, protecting your interests, to handle your tax problems.  You want the best Massachusetts tax attorney or CPA who specializes in resolving IRS and state tax problems!  That doesn’t mean paying top dollar.  You can find an affordable tax attorney or CPA who has the expertise to resolve your tax issues.

Don’t be afraid.  Having tax problems does not mean you’re a bad person!  Many, many people get into trouble with the IRS due to simple mistakes: missing deadlines, for example.  Sometimes your tax problems are entirely not your fault.  Almost every day in the news, you’ll find stories of celebrities and business tycoons that have run afoul of the IRS.  It doesn’t matter who you are or what your tax problems may be:  They still have to be fixed!  Don’t let fear sideline you — or impact your financial future!

Finding Qualified Tax Help in Massachusetts

Don’t trust your financial future to just anyone. People on TV may promise big results — but deliver next to nothing in the way of tax help.  Ask questions and do your research: you want to work with a tax problem solver you can trust!

No Cheat Codes for the IRS: Video Game Developer Goes to Jail for Tax Fraud

Video game developer David Rushton is going to spend six months in jail for tax evasion.  This is certainly quite a change in Rushton’s circumstances: he’d been a successful video game developer, working on Street Fighter II: Hyper Fighting, Tiger Woods PGA Tour 2005, and other well regarded titles.

What went wrong? David Rushton started his own company in 2005, which grew to employ over 200 people.  He then failed to file his tax returns for the next two years.   Additionally, he filed phony W-2s that generated fraudulent returns. The Utah Tax Commission investigated, and it was game over for David Rushton.

Filing Late Tax Returns

David Rushton failed to file state tax returns for two years.  He’s not alone.  Many people miss state and federal tax filings, with absolutely no intention of ever breaking the law.  Filing a return gets forgotten, or postponed, and suddenly a year’s gone by. Then another year passes, and another.  People delay addressing the issue because they don’t know where to start.

Unfortunately, a serious problem can develop while you’re trying to figure it out. Failure to file state and federal tax returns carries serious criminal penalties.

It’s always better if you find solutions to your tax problems before the tax authorities let you know there’s a problem.  Don’t wait for the state tax department or the IRS to contact you about your unfiled tax returns. Start solving the problem right away. If you are in the same situation, here’s a few things you need to know:

  • You have the right to file an original return, no matter how late it is!
  • Late returns often receive special scrutiny from the tax authorities.
  • It is prudent to have qualified professional assistance when filing late tax returns — particularly if you’re going back a number of years.

Don’t file late tax returns on your own.  Work with a licensed tax professional to make sure your interests are protected.

What Will It Take To Solve Your Tax Problems?

2010 is drawing to a close. Is this the last year you’ll spend with the pressure of unresolved tax issues hanging over your head? The answer to that question lies entirely in your hands – but many people don’t know how to begin to answer it.

If you have unresolved tax issues, including unfiled or late tax returns, payroll tax problems, or more, you know the stress, tension, and fear that comes from this situation. You may have experienced the sleepless nights and a sinking feeling in your stomach every time you have to check the mail — is another IRS notice in there, waiting for you?

Tax Problem Solvers in Massachusetts

The first step in resolving your tax problems is making the choice to face the situation head on.  Your tax problems won’t disappear on their own.  The IRS is not going to forget about you; your case won’t ‘get lost in the paperwork’ indefinitely.  You can not run away from tax problems: they will follow you from job to job, state to state, affecting every aspect of your financial life.

The only way to get rid of tax problems is to solve them.

You don’t have to do this alone.  You don’t need to become a tax attorney or some kind of expert on resolving IRS problems.  That help is available to you. Your job is to find the best people to help you, who are committed to efficiently and effectively solving your tax problems.

Beware of scammers and fraudulent providers!  Many of the well-known ‘tax solution providers’ you may have seen on TV have run into problems with the law for not providing the services they promise their clientele.  Don’t be lured in by over-the-top promises.  If the situation sounds too good to be true, it probably is.  Research your options, and select licensed tax professionals who have proven expertise in resolving tax issues like yours.

As the Federal Trade Commission and state Attorney Generals crack down on scam tax relief firms, where can consumers turn to for help with their IRS and state tax problems?

Just last month, the Federal Trade Commission shut down American Tax Relief, a Beverly Hills, California-based company that guaranteed it could settle tax debts for individuals for a fraction of what they owed. The state of California recently filed suit against Roni Deutch, AKA the “Tax Lady”, for a deceptive ad campaign that offers very little proof that the firm’s clients are getting any real-world benefit and overstates claims of winning against the IRS. Suit was also brought against J.K. Harris of Charleston, South Carolina by the state of Massachusetts in conjunction with the attorney generals from 17 other states for false and deceptive trade practices and nonperformance of work. A $1.5 million judgment against J.K. Harris was awarded to the state of Massachusetts and the other 17 states. Are these three isolated cases? Can you believe any firm that says they can help settle your tax debt for less than what you owe?

“These three firms are just the tip of the iceberg when it comes to companies claiming to be tax debt relief specialists who say they can settle your tax debt for pennies on the dollar,” said Matthew Previte, CPA, of Matthew J. Previte, CPA, PC and TaxProblemsRUs.com. “The sad part is that tax representation firms like these create a genuine distrust of any company who can genuinely help delinquent taxpayers with tax debt owed to the IRS or their state DOR.”

Previte, whose Natick, Mass.-based tax representation firm has specialized exclusively in representing individuals and businesses with IRS and state tax problems since 1997, says the real problem with companies like American Tax Relief, Roni Deutch, and J.K. Harris is that they make promises to clients that they can’t possibly deliver on. Says Previte, “The simple fact remains that approximately 95 percent or more of delinquent taxpayers do not qualify to settle their tax debts through an Offer in Compromise.”

So, what options do Americans who owe the IRS or their state DORs have besides representing themselves? Previte suggests there are plenty of reputable tax representation firms out there but consumers must do their due diligence before selecting a firm, such as:

Avoid firms that guarantee a settlement – There are four main factors involved in settling your tax debts through an Offer in Compromise. The four factors are: (1) your current financial condition, (2) the tax law and IRS procedure, (3) your cooperation in providing the requested information needed to settle your case, and (4) the competency of the tax representation firm you have chosen. A tax representation firm that guarantees settlement is a major red flag since the first three of these factors are completely outside of their control and can change while in the process of trying to settle your tax debts causing an eligible Offer candidate to become ineligible. Meaning, you could start off as a great Offer candidate but later become ineligible due to changes in your financial condition, tax law and IRS procedures, or your failure to cooperate.
Use a locally based tax representation firm staffed by licensed tax professionals (CPAs, Enrolled Agents (EAs), or tax attorneys) that practices exclusively in resolving IRS and state tax problems – Negotiating with the IRS or state DOR is a unique skill set unto itself. CPAs, EAs, and tax attorneys, although they perform various tax services such as tax return preparation and tax planning, are rarely well versed in the workings of the IRS or state DORs. It is rare if they handle one tax controversy case a year. You want to work with a licensed tax professional whose firm focuses exclusively in representing individuals and business in trouble with the IRS or state DORs, with a physical, brick-and-mortar location that’s within driving distance to you so you can schedule a face-to-face meeting before engaging them to represent you.
Ask for references – If you don’t know anything about a particular tax representation firm, ask for references. Most will be more than happy to provide contact information for satisfied clients or conventional tax professionals (CPAs, EAs, tax attorneys) who have referred them clients. You can also research a prospective tax representation firm by going to your state’s society of CPAs web site, state bar association web site, or state society of Enrolled Agents web site. The overwhelming majority of licensed tax professionals working at any reputable tax firm will be members of one of these societies. Also, do a search with your local Better Business Bureau and state licensing board (CPAs, tax attorneys) or IRS Office of Professional Responsibility (EAs) as well as a general Google search. You would be amazed at what you can discover about your prospective tax representative online.
Work with a smaller firm – When it comes to larger vs. smaller firms, you are most likely to get personal attention when working with a smaller firm. Larger firms tend to assign your case to junior staff and there’s a possibility that a senior staff member might not even review your case. For many larger firms, the focus can be more on selling and collecting retainers than getting actual results. With smaller firms like Matthew J. Previte, CPA PC, the principal reviews every case.

“It makes perfect sense that somebody carrying a huge tax debt would turn to one of these tax representation firms for help with their IRS or state tax problems. What you don’t want is an additional problem, like wasting precious dollars on a tax representation firm that makes promises it can’t keep,” said Previte. “By doing a little research before handing over a retainer fee, you prevent your hole from getting any deeper and can feel rest assured you’re taking a positive step forward in resolving your IRS and state tax problems.”

For more information on Matthew J. Previte CPA PC, please visit www.TaxProblemsRUs.com. To schedule a free confidential consultation, call 877-259-8200.

Why Wesley Snipes got caught. Celebrity or not, non-filers can run but they cannot hide from the IRS.

The simple answer as to why Wesley Snipes will soon begin serving a three-year sentence for tax evasion is that he didn’t file his tax returns for 1999 through 2004 and also tried to get a $7 million refund in 2006 on returns filed before he stopped filing in 1999. The broader answer is that in 2010, the IRS has more sophisticated resources, more personnel, and more incentive (nearly $345 billion owed to the federal government, which has a budget deficit in the trillions) than ever before to track down non-filers. In 2010 and beyond, if you fail to file your tax returns, chances are exceptional that you will get caught.

“What non-filers do not realize is the IRS will prepare a Substitute For Return (SFR) for you if you don’t file a tax return yourself. Only that SFR will not have the vast majority of the deductions you might be entitled to had you filed on your own,” said Matthew J. Previte, CPA, a local taxpayer advocate expert and owner of TaxProblemsRUs.com. “So, if you don’t file a tax return for several years like Mr. Snipes, the IRS has the technology to prepare an SFR for you and then will start burying you with severe penalties and interest based on that grossly inflated SFR assessment.”

Fortunately for non-filers, the IRS generally only looks back six years for unfiled tax returns. Yet without including all the deductions one might be entitled to, those SFR assessments can be grossly inflated due to that lack of deductions. The IRS can also utilize any number of resources to calculate income. For example:

  • Bank accounts – IRS can track non-filer accounts and review your deposit and spending histories.
  • Credit card spending – IRS can track overseas and domestic spending to prove income.
  • Audits of payees – Often times the people non-filers pay for goods and services are audited and that can alert the IRS to the payer’s non-filing.
  • IRS whistleblower programs – Does anybody else know you haven’t filed? An ex-wife or significant other? Perhaps a vindictive business associate? IRS whistle-blower programs raise the red flag and agents are more than happy to follow those leads.

So, with all the mechanisms available to the IRS to catch non-filers, why do people still not file?

“The reasons vary. Everything from bad advice from tax protestors and unscrupulous tax advisors to financial or health problems to even just plain old general neglect. Once one year is unfiled, fear and embarrassment most often perpetuate the problem, causing additional years to go unfiled. Some might even think if they don’t file, they won’t ever have to pay taxes. I’ve represented quite a few people who haven’t filed for 25 years or more,” said Previte. “The reality is, with the resources the IRS now has, non-filers will get caught and the punishment, if prosecuted and proven guilty like Mr. Snipes, is one year in prison per year you don’t file up to six years. If you’re lucky enough to avoid prosecution and jail time, the IRS will still bury you in taxes, penalties, and interest.”

Continues Previte, “The real irony about non-filers is that by filing their tax returns—even if they don’t have the money to pay the IRS—they have more options to resolve their tax debts than by not filing their tax returns.”

Some of those options include: 

  • Offer in Compromise program
  • Payment plan
  • Bankruptcy
  • Uncollectible status
  • Penalty Abatement
  • Lien Subordination
  • Innocent Spouse Relief

“These are just a few of the scenarios where having a qualified licensed tax professional represent you—instead of pulling your bed covers over your head and praying you don’t get caught–can literally save you thousands of dollars and dramatically reduce the likelihood of prison time,” said Previte. “At the very least, it can lessen the stress and anguish that come with having tax debt hanging over your head and your family’s.”

To schedule a free confidential consultation, call 877-259-8200 or, for more information, visit www.TaxProblemsRUs.com.

A taxing situation…With the new IRS, coming forward is the best option for late filers, non-filers, and delinquent payers.

By April 15, 2010, 84 percent of Americans filed their tax returns on time. That means 16 percent didn’t. That omission translates to a figure somewhere near $345 billion in taxes owed to the U.S. Treasury Department. With a budget deficit in the trillions and rising, the IRS is expected to increase its audits of both personal and business tax returns as well as pursue greater enforced collection action against individuals and businesses using levies, liens and seizures.  And that puts late filers, non-filers and delinquent payers on notice: Uncle Sam wants you now more than ever.

So, what’s a non-filer or delinquent payer to do? Many will delay dealing with the problem, literally hiding from the IRS. Yet according to Matthew J. Previte, CPA, a local taxpayer advocate expert and owner of TaxProblemsRUs.com, the IRS will get its money and then some from non-filers and delinquent payers in penalties and interest. The key is to be proactive and face the music.

“When we’re children, our parents said if we told the truth, things would be far easier on us than if they found out later. That may sound rather simplistic, but it’s the same with the IRS and your state’s DOR,” said Previte. “There are a number of options that you can work out with the IRS and your state to address your situation.”

Besides a lack of funds, pride, procrastination and a number of other reasons, most people are quite intimidated by the IRS and hesitant to come forward before the IRS comes to them. Since 1997, Previte’s Natick, Mass.-based tax firm has specialized solely in representing individuals and businesses with federal and state tax problems, including audits, non-filers, and delinquent payers.

“What most people do not realize, and that includes many CPAs and tax attorneys, is that dealing with the IRS and state DORs is a specialty unto itself,” said Previte. “We can provide our clients with resolutions to very sticky situations not only because we’re licensed tax professionals but because we have successfully worked with both the IRS and state tax agencies full-time on a daily basis for many years and we know how they work.”

So what are some of the options available to people who owe taxes? Some options include:

  • Offer in Compromise program – This little known program enables qualified taxpayers to negotiate a settlement for a fraction of what they owe. Who qualifies? Those taxpayers who can demonstrate an inability to pay their delinquent taxes in a short period of time.
  • Payment plan – Many people are able to pay their tax debts but just need a little time to pay it off. Negotiating payment terms you can live with is the key. Unfortunately, penalties and interest will continue to be charged on your outstanding balance as you pay the debt off. However, you may qualify to have the penalties removed or abated if you can show reasonable cause for filing late or paying late. For those unable to pay their tax debts in full over time, a Partial Pay Installment Agreement may be available. Under this option, payments are made until the collection statute expires. Any unpaid balance at the end of the collection statute expires and becomes legally uncollectable, leaving the taxpayer free from paying the remainder of any balance due.
  • Bankruptcy – Did you know that taxes in many cases can be discharged or wiped out in a bankruptcy. Many people, as well as attorneys, are not aware of this. For those who qualify, bankruptcy often times can be the solution to resolve their crushing tax problems. Proper pre-bankruptcy planning—for Chapter 7, Chapter 11, or Chapter 13—is key to determining if bankruptcy is or can be a viable solution.
  •  Uncollectible status – Every year the IRS puts many taxpayers into the “Uncollectible Status” category or classifies them “Currently Not Collectible” (CNC). What essentially this means is that the IRS will not proactively seek back taxes from a taxpayer that owes because of validated economic hardship. If their finances improve (as they will monitor) collection efforts will resume.
  • Penalty Abatement – The IRS charges penalties for filing late, paying late, underpaying your estimated tax payments if you’re self-employed, negligence if you make mistakes in preparing your tax return, etc. Many citizens could pay off their tax debts if it weren’t for penalties that double, triple, or quadruple their tax bill. The law does allow taxpayers who have “reasonable cause” to file for a Penalty Abatement.
  • Lien SubordinationSome taxpayers could pay off their tax debt if they could get a home equity loan. Unfortunately, these taxpayers can’t get home equity loans to pay off their old tax debt because the IRS has filed Federal Tax Liens against their property. A Lien Subordination allows the IRS to reduce its Lien priority and give your bank superior Lien priority protecting their loan in exchange for the proceeds from the loan. This way, the IRS gets the equity it had a Lien against and your bank is protected by their superior Lien.
  • Innocent Spouse Relief – When married couples sign a joint tax return, they both become liable for the taxes on that return. If at some future time the IRS audits that joint tax return and determines that additional taxes are due, both spouses become liable for the taxes. Unfortunately, these additional taxes are sometimes due to the misdeeds or fraud committed by one spouse. Sadly, the Innocent Spouse also gets saddled with the tax debt. Innocent Spouse Relief was designed to alleviate unjust situations where one spouse was clearly the victim of fraud perpetrated by their spouse or ex-spouse. If you qualify for Innocent Spouse Relief, you may not owe any tax.

“These are just a few of the scenarios where having a qualified licensed tax professional represent you can literally save you thousands of dollars and dramatically reduce the stress and anguish that comes with having tax debt hanging over your head—and your family’s for that matter,” said Previte.

For more information on TaxProblemsRUS.com, please visit www.TaxProblemsRUs.com. To schedule a free confidential consultation, call 877-259-8200.