Tax Relief Blog

Tax court upholds rejection of offer in compromise OIC denial

September 2, 2019 | Mike Habib, EA

The Tax Court has upheld the IRS’s decision to reject a taxpayer’s proposed offer-in-compromise and to decline to abate interest and failure-to-pay additions to tax.

The IRS may enter into an offer-in-compromise to reduce a taxpayer’s outstanding tax liability if, among other reasons, there is doubt as to collectability.

Rejection of offer in compromise OIC denial-

The IRS may compromise a tax debt on the basis of doubt as to collectibility where the taxpayer’s assets and income make it unlikely that the IRS will be able to collect the entire balance. (Reg. §301.7122-1(c)(2)) IRS can look at the taxpayer’s expenses, such as school costs. But the Internal Revenue Manual instructs settlement officers (SOs) that private school tuition is an allowable expense only if required for a physically or mentally challenged child and no public education providing similar services is available.

IRS PLR Discusses Real Estate company not qualifying for 501(C)(3) status

August 9, 2019 | Mike Habib, EA

In a Private Letter Ruling, IRS has determined that an organization does not qualify for Code Sec. 501(c)(3) exempt status because, among other things, the organization’s articles of incorporation don’t limit its purposes to one or more exempt purposes and expressly empower it to engage in business activities under state law.

IRC Code Sec. 501(c)(3) provides an exemption from federal income tax to organizations organized and operated exclusively for charitable or educational purposes, provided no part of the net earnings inures to the benefit of any private shareholder or individual.

IRS Reg. §1.501(c)(3)-1(a)(1) provides that in order to be exempt as an organization, the organization must be both organized and operated exclusively for one or more purposes specified in such section. If an organization fails to meet either the organizational test or the operational test, it is not exempt.

Client tax update second quarter 2019

July 12, 2019 | Mike Habib, EA

The following is a summary of important tax developments that have occurred in April, May, and June of 2019 that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable. Learn more about our IRS tax help.

Final regulations shoot down states’ SALT limitation workaround. For 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) limits an individual taxpayer’s annual SALT (state and local tax) deductions to a maximum of $10,000, with no carryover for taxes paid in excess of that amount. (The SALT deduction limit doesn’t apply to property taxes paid by a trade or business or in connection with the production of income.) As a result, many taxpayers won’t get a full federal income tax deduction for their payments of state and local taxes. Following the TCJA’s passage, some high-tax states implemented workarounds to mitigate the effect of the SALT deduction limit for their residents. One method used was to set up charitable funds to which taxpayers can contribute and receive a tax credit in exchange. The IRS has issued final regulations, which generally apply to contributions after Aug. 27, 2018, that effectively kill this workaround. The regulations provide that a taxpayer who makes payments to, or transfers property to, an entity eligible to receive tax deductible contributions must reduce his or her charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive.

The IRS also issued a safe harbor that allows an individual who itemizes deductions to treat, in certain circumstances, payments that are or will be disallowed as charitable contribution deductions under the final regulations, as state or local taxes for federal income tax purposes. Eligible taxpayers can use this safe harbor to determine their SALT deduction on their tax-year 2018 return. Those who have already filed may be able to claim a greater SALT deduction by filing an amended return, Form 1040-X, if they have not already claimed the $10,000 maximum amount.

Employment payroll Form 941 – EA, CPA, Tax attorney resolution

June 24, 2019 | Mike Habib, EA

Form 941 is a quarterly payroll report filed by employers indicating employees’ wages, tips, withheld tax, medical, taxes, and social security taxes. It is a form of trust fund because the employer is in a fiduciary position to hold fund on employee’s behalf before the government receives it. If an employer fails to do so, it may result to tax liability and accumulation of employment tax debts under form 941 and 940. Consequently, the IRS may decide to get the debt through levies, liens, the sale of assets or getting the business’ trust fund from officers. A person may also end up bearing personal, civil and criminal liability.

Get a free case evaluation by calling us at 877-788-2937 – all 50 states.

CP 504 Help: What you need to know if you receive one in the mail

June 4, 2019 | Mike Habib, EA

The IRS or Internal Revenue Service has a singular purpose as part of the Federal Government, it is designed to collect and account for all of the tax dollars owed to the government. The IRS derives all of its power from the United States Tax Code and all actions that they take are done so using many different notices and forms. One of those forms is the CP 504 notice and it has to do with IRS Tax Levy.

Get tax help today, free case evaluation at 877-788-2937.

ROLE OF A TAX LAWYER, EA, CPA IN TAX DEBT REPRESENTATION AND TAX RELIEF

May 24, 2019 | Mike Habib, EA

This article will define tax debt and tax relief, the role of representation by EA, CPA, lawyer, benefits that come with using a power of attorney, situations that they come in and some of the tax relief solutions they offer.

Tax debt is where one fails to pay taxes to the government as required by law. Tax relief is a program put in place to lessen or abolish tax debts.

Tax Audit Representation – EA, Attorney, CPA

May 15, 2019 | Mike Habib, EA

A tax attorney, EA enrolled agent, CPA certified public accountant, provide tax audit representation to taxpayers who have never been audited in cooling down their anxieties and eliminating fear when the Internal Revenue Service checks in to conduct the audit. The first-time clients to be audited are not aware of what to expect during the inspection or what exactly is to be reviewed. An audit defense attorney, EA, CPA would, therefore, be needed to step in since they have vast experience and know what to expect during the tax audit. The fear will be dealt with if a competent EA, CPA, lawyer is hired. It is in the best interest for taxpayers seeking representation is to hire an EA, attorney, CPA so they do not put their case at risk. This is because an attorney, CPA, EA exhibits confidence and knows how to go about answering questions asked by the taxman. A competent representative, power of attorney, being present will let the client be at ease.

IRS tax penalties – how to abate them

May 3, 2019 | Mike Habib, EA

— This is a technical and educational piece —

The IRS consistently assesses different type of penalties. In 2017 the IRS assessed nearly 39 million civil penalties totaling roughly $26.5 billion, the IRS abated 4 million civil penalties totaling $12.6 billion. More than 80% of civil penalties were assessed against individuals, estates, and trusts for income taxes.

Taxpayers asking why me, why more penalties, and can I get rid of them or abate them?

Purpose of tax penalties: Penalties exist to encourage voluntary compliance by supporting the standards of behavior required by the tax code. I.R.M., pt. 20.1.1.2 (Nov. 21, 2017)

Know Your IRS Tаx Levy Rights

April 19, 2019 | Mike Habib, EA

Whаt is аn IRS Levy?

Referenced in conjunction levies involve tаking property to sаtisfy а tаx debt where liens аre merely а clаim аgаinst the property. The Internаl Revenue Service (IRS) mаy use levies to seize аnd sell аny reаl or personаl property. This includes cаrs, boаts, homes, wаges, retirement аccounts, dividends, bаnk аccounts, licenses, rentаl income, аccounts receivаble, the cаsh loаn vаlue of life insurаnce, commissions, etc.. The levies thаt аre most frequently seen аre bаnk аnd wаge levies.

Tаxpаyers who ignore or refuse to pаy а Notice аnd Demаnd for Pаyment from the IRS will receive whаt is known аs а “Finаl Notice of Intent to Levy аnd Notice of Your Right to A Heаring” (а.k.а. “Intent to Levy” notice) аt leаst 30 dаys before the levy.

Get a brief case evaluation by calling us at 877-788-2937.

IRS Tаx Help with Offer In Compromise

April 5, 2019 | Mike Habib, EA

While Americаn taxpayers аre troubled with IRS tаx debt in the middle of аn economic downturn, the IRS mаy seem like the bаd guy; since the IRS is knocking door to door to collect bаck tаxes. The IRS isn’t in the wrong to аsk taxpayers to pаy their bаck tаxes. So there аre two viewpoints. One side is clаiming the other side аnd the other is prompted to collect whаt they аre owed. Unpaid back taxes versus offer in compromise resolution is a dilemma.

Get a brief case evaluation by calling us at 877-788-2937.