Tax Relief

IRS Tax Levy On IRA Account

September 15, 2010 | Mike Habib, EA

Can the IRS levy an IRA for Back Taxes? Yes the IRS can levy your IRA for unpaid back taxes.

Mr. Wayne Smith did not pay his back taxes after filing 3 years of tax returns. He owed the IRS around $36,000 of back taxes. He went to tax court, and the court ruled for the IRS and its $36,000 levy on Mr. Smith. Mr. Smith had a personal hardship, he was spending more than $800,000 plus his IRA income on his gambling addiction and not paying his back taxes.

Ordinary creditors are prevented from levying pension and IRA accounts due to anti-alienation provisions, the IRS does not conform to these anti-alienation provisions as many taxpayers think, the IRS can and will levy IRA and other retirement accounts to collect on any unpaid back taxes. In other words, the IRS is pretty much free to levy IRA accounts at its own will specially in cases of flagrant taxpayers abuse. Learn more by reading Internal Revenue Manual Section 5.11.6.2(5).

AVOIDING IRS TAX PENALTIES: TAXPAYERS BEWARE Part 2

August 10, 2010 | Mike Habib, EA

Part 2 of 2

• Dishonored Check – A penalty is charged if a taxpayer’s check is returned because of insufficient funds. For checks of $1,250 or more, the penalty is 2% of the check amount. For checks less than $1,250, the penalty is the lesser of $25 or the amount of the check.

• Paying Late – The penalty is ½% of the unpaid tax for each month or part of a month the tax is unpaid. If the IRS issues a Notice of Intent to Levy and the taxpayer does not pay the balance within 10 days, the penalty increases to 1% per month. The penalty cannot be more than 25% of the tax paid late. The late payment penalty is reduced to ¼% per month for those paying in installments.

AVOIDING IRS TAX PENALTIES: TAXPAYERS BEWARE Part 1

August 5, 2010 | Mike Habib, EA

Most tax penalties are substantial, punitive and can dramatically increase the overall tax bill. Penalties are assessed for a many reasons. Some tax penalties are due to a taxpayer’s carelessness or inattention to tax details. Other penalties are incurred due to the overstatement of deductions, the failure to report income, missing documentation, negligence, fraud or procrastination.

Recently, Congress added additional penalties for making excessive claims or filing frivolous tax returns. The following is an overview of the IRS penalties that can be imposed on a taxpayer.

The IRS assessed taxpayers over $29,000,000,000.00 (that’s 29 Billion Dollars) in penalties during 2009.

Important tax developments

July 10, 2010 | Mike Habib, EA

The following is a summary of the most important tax developments that have occurred in the past three months 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.

Deadline extended for closing home purchase to qualify for homebuyer credit. Relief has been provided to taxpayers who couldn’t meet a key June 30, 2010, closing date for qualifying for the homebuyer credit. As a general rule, both the regular first-time homebuyer credit of $8,000 and the reduced credit of $6,500 for long-term residents generally expired for homes purchased after Apr. 30, 2010. However, if a written binding contract to purchase a principal residence was entered into before May 1, 2010, the credit could be claimed if the purchase closed before July 1, 2010. Under the relief measure, if a written binding contract to purchase a principal residence was entered into before May 1, 2010, the credit may be claimed if the purchase is closed before Oct. 1, 2010. Thus, this extension allows homebuyers who signed a contract no later than the April 30th deadline to complete their closing by the end of September.

Guidance addresses tax breaks for hiring new employees. Employers are exempted from paying the employer 6.2% share of Social Security (i.e., OASDI) employment taxes on wages paid in 2010 to newly hired qualified individuals. These are workers who: (1) begin employment with the employer after Feb. 3, 2010 and before Jan. 1, 2011, (2) certify by signed affidavit, under penalties of perjury, that they haven’t been employed for more than 40 hours during the 60-day period ending on the date the individual begins employment with the qualified employer; (3) do not replace other employees of the employer (unless those employees left voluntarily or for cause), and (4) aren’t related to the employer under special definitions. The payroll tax relief applies only for wages paid from Mar. 19, 2010 through Dec. 31, 2010.

Taxpayer Advocate Report

July 10, 2010 | Mike Habib, EA

National Taxpayer Advocate Submits Mid-Year Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year

WASHINGTON — National Taxpayer Advocate Nina E. Olson today released a report to Congress that identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the coming fiscal year. The report expresses concern about the adequacy of IRS taxpayer service, particularly as the IRS begins to implement health care reform, about new information reporting burdens facing small businesses and others, and about certain IRS collection practices.Among the areas the report identifies for particular emphasis in FY 2011 are the following:1. Taxpayer Services.

Spending for IRS taxpayer service programs has been declining in recent years. At the same time, more taxpayers have been contacting the IRS for assistance as the IRS has been tasked with administering an increasing number of social benefit programs, including Economic Stimulus Payments, Making Work Pay credits, and First-Time Homebuyer credits. The report says that as a result of the imbalance between taxpayer demand and IRS resources, the IRS has fallen short of providing adequate taxpayer service in important areas. Most notably, after answering a high of 87 percent of its calls from taxpayers seeking to reach a telephone assistor in FY 2004, the IRS answered only 53 percent of its calls in FY 2008 and has set of goal of answering only 71 percent in the current fiscal year.

Tax Problems

July 9, 2010 | Mike Habib, EA

Tax Problems are problems related to Taxation and most prominent is Income taxation. It affects natural persons – individuals or people and juridical persons – companies, corporation and other legal entities. Tax problems begins from the time you start earning for a living and receiving income or making profits, every time you spend or the expenses you incur up to the time you have spent all of your hard-earned money and profits. Tax Problems are those affecting any benefits you receive from the government and elsewhere, the tax exemptions you enjoy; even the savings you made and interest you earn and receive from any savings and investments. Tax problems also affect the home or properties you buy and sell; it involves even the how many children you have and if you donate to some charity or if somebody makes any payment to you or if you just inherited a lump sum of money, Tax Problem will be there if you don’t declare all you financial transactions and activities and don’t check which are taxable and not and if so, when, when and how to make tax payments.

This is so because, tax problem covers situations from the preparation of the income tax return, calculating the tax liabilities, earnings and expenses and exemptions until the full payment of the income tax is made. But this is just under the normal circumstances. Tax problems also arise under special circumstances like late in filing of the return, late in payment of the tax due, extension in filing returns, extension in payment of tax or taxes, and payment in installments. When you think everything is already fine and complied with, you will be notified and learn of a Tax Lien, Tax Levy or a Bank Levy against you and even garnishment on your wage. You may well discover that a tax audit has been made and discovery of deficiency in payment arising out of improper or erroneous calculation of tax, discovery of inconsistencies between that declared in your income statement, expenses and exemptions as against the records of the IRS from other sources such as your employer’s payroll, your bank statement and for companies – calculation of sales tax and other duties and taxes, 941 Payroll tax and many more; the incorrect calculation of interests and consequently erroneous payment of the amount due.

When you resort to solving the tax problem, you will find that you will encounter more related tax problems in paying back taxes, problems in settling your debt, problem in negotiating with the IRS, problem in complying with IRS payment plan and what have you. For an individual, untrained mind in the field of taxation, even small and big business, this is a real headache and the simplest issue in complying with form alone, albeit, the substance is enormous as a cross carried on one’s shoulder.

Christian IRS Tax Help – Audit Representation – Back Tax Resolution

July 2, 2010 | Mike Habib, EA

Christian IRS Tax Help

By Former Dave Ramsey ELP 2012-2019

Christian IRS Tax help means reliable and professional help by a Christian tax professional. It is correlated with real solutions to IRS or State tax problems of a taxpayer with unpaid back taxes and or IRS audits. Most people avoid this topic while others ignite upon hearing IRS or TAX. But the truth is that, the IRS Tax Help is about tax problems assistance or simply means that there are several ways to help you if you have IRS or State tax problems. For the record, it is not only the duty of the IRS officers and agents to effectively collect taxes or review tax returns or statement of income or perform detailed analysis of financial status of the taxpayer or otherwise give them difficulties and headache, it is also the duty of the IRS to help and assist taxpayers with their taxation problems, or find a solution to a taxpayers’ liability. The IRS also offers tax resolution or relief options to provide tax amnesty in some cases to delinquent taxpayers. Our firm provides IRS Tax help to our clients, either individual taxpayers or businesses with back taxes and IRS audit representation.

IRS Tax Help to Oil Spill Victims

June 28, 2010 | Mike Habib, EA

IRS Offers Tax Help to Oil Spill Victims

SOURCE: WEBCPA

The Internal Revenue Service has issued guidance to individuals and businaesses affected by the oil spill in the Gulf of Mexico and announced new efforts to help affected taxpayers, including a special Gulf Coast Assistance Day on July 17.

Payroll tax problems

June 20, 2010 | Mike Habib, EA

Payroll Tax Problems 941 / 940 – Unpaid employment tax relief

The 941 Payroll Tax problem is businesses’ tax problem concerning their payroll. Before understanding what a 941 payroll tax problem is, it is important to know what it is. There are three (3) main types of taxes falling under the category of payroll taxes. First is the regular income tax that must be withheld from the business’ employees’ wages or salaries. Second is the Federal Insurance Contribution Act (FICA), which is a contribution to the Social Security and Medicare. The third is the Federal Unemployment Tax (FUTA).

The first is commonly known as the withholding taxes from employees which will appear in their individual pay vouchers or pay slips. The amount of taxes withheld is dependent upon the earnings of an individual employee, exemptions and deductions and basically based on their individual returns and calculation. An error in the deduction is considered a 941 payroll tax problem. On the second tax, Employers are required to withhold from the employees 7.65 percent of the first $62,700 income and match that amount so that the total FICA contribution will be equivalent to 15.3 percent. Again erroneous calculation of the percentage amount will fall as a 941 payroll tax problem. If you are a Self-employed persons, you have to should both or the entire FICA tax. The FUTA tax is solely paid by the employer equivalent to approximately 1 percent of the first $7,000 wages of an employee.

Tax Relief – Get tax debt relief today

June 19, 2010 | Mike Habib, EA

Tax Relief – Get tax debt relief today

Reasonable Cause/Good Faith Defense: Even if the taxpayer did not have substantial authority for a position and failed to make adequate disclosure, the substantial understatement penalty does not apply if the taxpayer had reasonable cause for the tax underpayment and acted in good faith [IRC Sec. 6664(c); Reg. 1.6664-4]. This defense is applied on a “facts and circumstances” basis [Reg. 1.6664-4(b)]. However, the key factor seems to be whether the taxpayer made a reasonably energetic attempt to determine the correct tax liability. For example, an honest misunderstanding of fact or law, an isolated computational error, reliance on professional tax advice, or reliance on information returns all indicate reasonable cause/good faith. However, if the taxpayer should have known better, the defense will not apply.

Observation: According to IRM 20.1.5.6, the most important factor in determining whether the taxpayer has reasonable cause and acted in good faith is the extent of the taxpayer’s effort to report the proper tax liability. For example, reliance on erroneous information reported on an information return indicates reasonable cause and good faith, provided the taxpayer did not know or have reason to know that the information was incorrect. Similarly, an isolated computational or transcription error may indicate reasonable cause and good faith. Other factors to consider are the taxpayer’s experience, knowledge, sophistication, education, mental and physical condition, and reliance on the advice of a tax advisor.