Orange County Accountant

IRS tax debtIf you happened to be one of the unfortunate individuals to owe tax debt from your past years, or you have paid your taxes for the current year, and still expect to owe further taxes to the IRS in the form of IRS debt, it?s possible for you to find a solution to redeem your taxes. The actual solution lies in not ignoring to pay your debt. Even though the IRS can collect the taxes up to ten years, it possesses many other powerful options to recover, and chances are it will. If you have outstanding IRS tax debt, the best possible solution is to utilize your savings, or alternatively borrow some funds to clear the debt. By paying your entire outstanding dues, it?s possible to save upon the penalties and fines, which are likely to be levied in case you decide to avail more time and clear your taxes over a period of time. If one borrows against some asset value such as your home, it?s quite possible the interest incurred might be tax deductible. It?s also possible to avail tax relief if you can represent your case properly to the IRS.Tax attorney servicesSince last few years, tax attorneys, and the services offered by them have been in high demand, especially since the tax season is approaching soon. Many taxpayers are likely to need tax help. While selecting your representative to deal with your IRS issues and concerns, it is quite important to retain somebody who can represent you to the best of his or her abilities, and not have conflicts while representing your case to the IRS. Even though the tax attorneys can be quite knowledgeable, properly trained, and have the ability to handle your issues, it is found that they can lack in aggressiveness when it comes to representing you to the IRS. The thing is most agencies like to maintain good terms with the tax authorities, since their entire business is dependent upon special tax clients, helping out tax debtors in availing IRS debt help, and good market reputation. It?s sad that IRS often takes advantage of some timid and docile tax attorneys because it knows that firm prefer to keep a positive image, and IRS can well damage the reputation through propaganda.It?s generally believed that it?s expensive to retain a good tax attorney to avail IRS debt relief. At a first glance, the client might feel that the tax laws are simple to understand and straight forward. So they often feel they can communicate directly with the IRS and avail an acceptable situation. This could turn out to be a mistake, since IRS rules can be interpreted in many different ways, and IRS is an expert in that. So it?s recommended not to take any chances, and have an effective arbitration by employing the services of an experienced tax attorney to get effective tax debt settlement.

Someone i know wants to borrow money from me because he said the IRS garnished his whole check because he owes back taxes; I thought the IRS could only garnish 1/3 or 25% of your check and not all of it.

I heard from other people that they itemized all the receipts from groceries and other items that has taxes on them and they include this when they file their tax. They don’t own businesses so I don’t get how they can do this. Is there a separate form that I can fill out to include all my expenses that has taxes on them?

I recently became a Texas resident and paid sales tax to Texas on a car I purchased. Is that state sales tax deductable from my federal income taxes (Texas has no state income tax)?

If IRS collection notices are ignored, the IRS is forced to collect from taxpayers by force. They do this with their dreaded IRS levy. By law, the IRS has the right to levy bank accounts (IRS bank levy), garnish your paychecks (IRS wage levy), or even seize your assets. But you do not have to let the IRS bully you or your family. There are ways to stop an IRS levy. The first step is to know the enemy.

IRS Bank Levy- The IRS bank levy is an extremely harmful way to collect tax debt. All of the money you scrimped and saved for can be gone in an instant. First, the IRS freezes your bank account. Then they give you 21 days to contact them and make some sort of payment arrangement. If you do not comply, the IRS will keep all of the money in your account permanently. If you received a Notice of Intent to Levy from the IRS, it’s imperative to act fast and get your tax debt taken care of. The freeze on your account from the IRS bank levy will cause issued checks to bounce, bank fees to be incurred, and will give you no access to pay your current obligations from your account. At this point, it’s a very wise idea to consider professional tax help for your IRS bank levy. A tax debt professional has a better chance of negotiating with the IRS to have an IRS bank levy removed in the short 21 day time limit. The IRS bank levy is an urgent issue meriting your full and immediate attention.

IRS Wage Levy – The IRS wage levy is another weapon in the IRS arsenal which is used to collect back tax debt. It’s also known as wage garnishment. The IRS can take a percentage of your paycheck until your tax debt is paid, or until the statute of limitations on your tax debt expires. Your employer is required by law to proceed with the IRS wage levy once the Notice to Withhold has been received from the IRS. They must use a mandated formula to determine “how much of your paycheck is to be garnished and sent directly to the IRS”. It is not unusual for a delinquent taxpayer to be left with 20%-25% of their “net paycheck” to live on, which obviously will not cover even basic living expenses. But there is help for this type of tax levy. There are two ways to stop an IRS wage levy. You can settle your tax debt and have it paid off, or you can have your account changed to a hardship or “Currently not Collectible” disposition. Because of the rapid financial damage that can be caused by an IRS wage levy, it is advisable to seek professional tax help.

Settling Tax Debt to Stop IRS Bank and Wage Levies – Settling your IRS tax debt is the fastest solution for stopping an IRS bank levy or an IRS wage levy. Once you are in the negotiation phase, the IRS levy will automatically stop. If your IRS settlement is approved, the IRS levy will actually be permanently “lifted” giving you complete relief from the tax debt problem!

Hiring Professional IRS Levy Help – It can be very hard to have your IRS tax debt settled when you fight against the IRS all on your own. Your chances of success are far greater if you can count on the help of reliable tax professionals that have experience dealing with the IRS’s complex procedures. If you are the victim of an IRS levy, then time is critical for you to minimize the financial destruction that is undoubtedly already occurring with your personal finances.

If you are feeling the stress of the upcoming April 15 income tax deadline, you have another option – you can file a tax extension and delay your income tax deadline to October 15.

The IRS is willing to grant you the six month income tax extension without you having to come up with an excuse to extend. In fact, the IRS doesn?t even ask why you need to extend. As long as you properly submit your extension request by providing accurate information, the IRS will grant you the six month extension automatically.

The fastest way to file an extension is to file it online through a website run by an approved IRS e-file provider like FileLater.com. FileLater.com makes the process easy. You?ll be asked for your contact information and then taken through a few simple questions to determine if you want to make a tax payment along with your extension. The whole process takes less than 10 minutes. A day later you?ll have an email back with the status of your extension. It?s that simple.

Another benefit to using FileLater.com is that they will help you ensure the information you submit is accurate, and they?ll help you submit multiple times (for no additional fee) if you for some reason get a rejection from the IRS.

FileLater.com will also provide you with an online calculator to help you determine if you should make a payment with your tax extension. If you decide to make a payment, you?ll be able to either mail a check directly to the IRS or pay via direct debit from your bank to the IRS as part of your tax extension e-file.

It is important to note that filing a tax extension does not grant you extra time to pay the IRS if you expect to owe the IRS additional tax dollars beyond any current W2 withholdings or estimated tax payments you?ve already made for the 2007 tax year. If you owe the IRS when you file your return and don?t pay when you file your extension, you may be subject to penalties and interest payments.

So, do yourself or your tax preparer a favor and file a tax extension. The deadline to file your income tax extension with the IRS is midnight on April 15. If you are for some reason rejected, you?ll have until April 20 to correct any errors and complete your extension.

1. Service tax authorities, of late, have been issuing notices to various borrowers of External Commercial Borrowings (ECB?s) from foreign branches of Indian banks and holding them liable to pay Service tax from September 10, 2004 under section 65(12)(a)(ix) of the Finance Act, 1994 which covers ECBs.

According to the borrower, the responsibility of paying service tax is of the service provider which is the foreign branch of the Indian bank and, hence, the Indian bank having a permanent establishment in India, is supposed to pay and not the borrower.

The contention of the service tax authorities is partially correct after coming into effect of section 66A of the Finance Act, 1994 from April 18, 2006.

Until the coming into effect of section 66A, the liability and obligation to pay service tax was that of Indian bank and not that of the borrower. Contrary to the contention of the service tax authorities, even under rule 2(1)(d)(iv) of the said Rules, effective from August 16, 2002 and June 16, 2005 respectively, the borrower cannot be made liable for the payment of service tax.

2. Rule 2(1)(d)(iv) reads as follows

?Person liable for paying the service tax? means,?

(iv) in relation to any taxable service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India, and such service provider does not have any office in India, the person who receives such service and has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India.?

From the aforesaid provisions, it would be clear that until April 18, 2006, the requirement under rule 2(1)(d)(iv) was that only in case where the service provider did not have any office in India, the person receiving taxable service was liable for paying service tax involved. In the cited case, the Indian Bank having its registered and head office in India, and a branch in a foreign country cannot be said to be a service provider who did not have an office in India.

After coming into effect of section 66A, rule 2(1)(d)(iv), substituted with effect from April 18, 2006 by the Service Tax (Second Amendment) Rules, 2006, reads as follows

??Person liable for paying the service tax? means –

(iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;?

As such, until April 17, 2006, the borrower was not a ?person liable for paying service tax? within the meaning of the Act and the said Rules, including rule 2(1)(d)(iv) thereof.

It is relevant to note herein that the phrase ?does not have any office in India?, in rule 2(1)(d)(iv), stands omitted from the substituted rule. As such, with effect from April 18, 2006, in any case where the taxable service is provided or is to be provided by either a person who has established a business in a country other than India or has a fixed establishment from which the service is provided or is to be provided in a country other than India or has his permanent place or usual place of residence in a country other than India, the service recipient in India would be treated as if it has itself provided the service in India and, accordingly, it would be liable to pay the service tax and comply with all procedural and other requirements as specified in the Act and the said Rules. The respective clauses in section 66A (1) (a) are disjunctive and, hence, once any of the three alternatives contained therein are satisfied, the service recipient becomes liable to pay service tax on the taxable service involved.

Applying the aforesaid provision, since the service is being provided by foreign branch of an Indian Bank, the condition precedent laid down in section 66A(1)(a) is satisfied and, in the absence of the phrase ?does not have any office in India? in rule 2(1)(d)(iv), as recipient of the services, the borrowers would be liable to make payment of the service tax payable on the ?Banking and Other Financial Services?.

3. The fees paid or to be paid are liable to service tax under ?Banking and Other Financial Services? under the Act with effect from September 10, 2004. The liability to pay service tax for the period prior to April 18, 2006 would be that of Indian Bank and on and from April 18, 2006, would be that of the borrowers.

If IRS audits me and all of my return is correct, Will IRS is responsible to waste my time to provide them extra documentation?

Qualify for an IRS Installment Agreement and Save Money by Negotiating the Lowest Possible Monthly Payments

IRS Announces Unprecedented Opportunity for Recession-Burdened Americans to Settle Outstanding Tax Debts

Struggling taxpayers may be eligible for tax breaks as the IRS eases enforcement and collection efforts to help Americans in financial distress. Because of the extraordinary challenges of today’s economy, the IRS is pledging to be more forgiving of Americans who have fallen behind on their taxes due to unusual financial hardship.

And one way you can settle your back taxes is by negotiating an Installment Agreement with the government that that allows you to pay liabilities over time.

If you cannot afford to make monthly payments and don’t qualify for another type of tax relief, such as an offer in compromise, there are other options including negotiating that your account be placed in a “currently not collectible” status so that you will not be required to make payments and the IRS will not pursue collection action.

What is an IRS Installment Agreement?

An Installment Agreement is a payment arrangement whereby the government allows a taxpayer to pay liabilities over time. Once a payment plan is established, the IRS will not take enforced collection action, including the levy of bank accounts or wages, as long as the taxpayer remains current with all filing and payment obligations. However, interest and penalties would continue to accrue until the outstanding balance is satisfied. Additionally, a tax lien may be filed as part of the terms of the installment payment agreement, depending on the amount of the total liability.

How to Negotiate an IRS Installment Agreement and Set Up a Payment Plan for Your Tax Debt

The IRS encourages taxpayers to pay what they owe as quickly as possible. For those individuals or businesses not able to resolve a tax debt immediately, an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts.

In most cases, the IRS will accept some type of payment arrangement for past due taxes. In order to qualify for a payment plan with the IRS you must meet the following rules and provide the IRS with this information:

*  You must have filed all tax returns (It’s OK to owe money but you must file).

* You will need to disclose all assets owned including all cash and bank accounts.

* You must not have adequate cash available in a checking, savings, money market, or brokerage account to pay the IRS.

* You must not have the capacity to borrow the amount owed to the IRS from other sources (i.e., a second mortgage on your home).

* You must not have adequate equity in a retirement account from which you can borrow or liquidate; for example, IRA’s or 401K’s.

The total dollar amount you owe usually dictates with whom the negotiations will be handled.

* Typically, IRS Revenue Officers are not involved in cases where the amounts owed are less than $25,000.

* The IRS will ask you to complete a personal financial statement and if a business is involved, you will also need a business financial statement.

* The IRS has determined allowable monthly expenses for individuals, which will be matched against your actual monthly expenses.

* The difference between your monthly income and your allowable monthly expenses will be the amount that the IRS will require you to pay on a monthly basis.

These monthly payments will continue until your outstanding tax liabilities are paid in full.

What the IRS May Not Tell You About Payment Plans

It is important to note that the IRS continues to add penalties and interest while you are making monthly payments. This may cause you to be paying what you consider a large monthly payment to the IRS and your outstanding balance may in fact be increasing due to additional penalties and interest.

The IRS may not explain this to you! So be careful!

Additionally, for taxpayers that enter into an installment agreement, the IRS may require a signed waiver to extend the time IRS can collect. While it is always in the best interest of the IRS to get a signed waiver, it may not be in the taxpayer’s best interest. If you are asked to sign a waiver, protect your rights, seek the advice of a tax resolution expert first.

The IRS in most cases, to protect their interest, will file a Notice of Federal Tax Lien, with the County Recorder’s office in the county you reside.  This will inevitably be reflected on your credit report decimating your credit (FICO) score.  In addition a recorded Federal Tax Lien means the IRS has a monetary interest (claim) against all real and personal property owned (at time of filing) and any and all real or personal property acquired in the future while the lien is in effect. Generally, the lien is effective throughout the 10 year Collection Statute of Limitations.

The Benefits of Hiring Professional Tax Representation to Negotiate your IRS Payment Plan

Whether the IRS demands full payment up-front or a payment plan that is substantially higher than what you can afford to pay, a professional tax resolution specialist can help you negotiate an arrangement for the lowest possible monthly payment and also provide you with various options for making those payments.

Additionally, if you owe more than $10,000 to the IRS, you will be required to provide full financial disclosure and you will need to hire specialized tax representation to negotiate on your behalf with the IRS.

IRS Pledges Greater Flexibility to Help Distressed Taxpayers

Although the IRS is pledging to be kinder and gentler to taxpayers in these challenging times, you will still need to meet your installment payment requirements. However, the IRS has announced that they will try to be more flexible with taxpayers who miss an installment payment.

“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” IRS Commissioner Douglas Shulman said. “We want to go the extra mile to help taxpayers, especially those who’ve done the right thing in the past and are facing unusual hardships.”

If a taxpayer with an existing installment agreement is worried about missing a payment because of a job loss or other financial hardship, Shulman has assured the public that a missed payment will no longer lead to an automatic end to that agreement.

Additionally, the IRS has announced that it is more likely to forgive a missed payment and they’ve instructed staff to not automatically default someone who is having trouble.

Frequently Asked Questions about IRS Payment Plans

What do you have to do to be eligible for an installment agreement?

To be eligible for an installment agreement, all returns that are due must first be filed.

What are the payment terms?

Installment agreements generally require equal monthly payments. The amount of an installment payment will be based on the amount owed and on the taxpayer’s ability to pay that amount within the time legally available for the IRS to collect. By law, the IRS has the authority to collect outstanding federal taxes for ten years from the date of assessment.

What are the conditions of an installment agreement?

As a condition of an installment agreement, any refund due in a future year will be applied against the amount owed. Therefore, taxpayers may not get all of their refund if they owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. The IRS will automatically apply the refund to the taxes owed. If the refund does not take care of the tax debt, then the installment agreement continues until all of the terms are met.

Does interest stop with an installment agreement?

Interest does not stop accruing until the entire obligation is paid. An installment agreement is more costly than paying all the taxes owed now. Penalties and interest continue to be charged on the unpaid portion of the debt throughout the duration of an installment agreement.

Are there fees to set up an installment agreement?

The IRS charges a user fee of $43 to set up the installment agreement. And it is possible for an installment agreement to be reinstated if the agreement defaults.

Also, installment agreements may be restructured to include additional amounts owed in one agreement. Reinstating or restructuring an existing installment agreement will cost an additional $24 user fee.

What are enforced collection actions?

Generally, IRS enforced collection actions (levy against personal or real property) are not made while an installment agreement request is being considered, or:

While an agreement is in effect,

* For 30 days after a request for an agreement has been rejected, and

* For any period while a timely appeal of the rejection or termination is being evaluated by the IRS.

Can my installment agreement be defaulted?

Yes. Failure to make timely payments can default the agreement. A defaulted installment agreement could subject a taxpayer’s account to enforced collection action and potentially have a negative effect on a taxpayer’s credit standing.

What is an annual statement of balance due?

In accordance with the law, installment agreement taxpayers receive an annual statement from the IRS. The statement provides the amount owed at the beginning of the statement period, the payments (credits) posted to account(s), any fees or assessments, and the ending balance. Currently, the annual statement is sent each year in July.

For more information on negotiating an IRS Installment Agreement or to get professional tax advice on reducing your IRS debt, visit www.taxresolution.com for a free tax relief consultation or call 866-477-7762.

Michael Rozbruch is one of the nation’s leading tax experts. A Certified Tax Resolution Specialist (CTRS), licensed CPA in the state of Maryland and the founder of Tax Resolution Services (http://www.taxresolution.com/), he helps individuals and small businesses solve their IRS problems and is dedicated to educating the public on tax planning and other strategies for managing their personal and business finances.

I am trying to compose a list of the important taxes/expenditures to think about when moving. I am going to use the list as a way to compare the different cities/states that my wife and I are interested in moving to.
1. Can you think of any more?
vehicle tax
property tax
school tax
local tax
vehicle inspections
income tax
sales tax
any environmental taxes/costs
estate tax
2. Can you name a place that is low in most of this categories?
Thanks