Tax Relief Blog

Christian IRS Tax Help – Audit Representation – Back Tax Resolution

July 2, 2010 | Mike Habib, EA

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.

¿PROBLEMAS DE IMPUESTOS?

June 22, 2010 | Mike Habib, EA

Alivio de problemas de impuestos federales (IRS), Alivio de problemas de impuestos estatales (BOE or FTB), Alivio de problemas de impuestos del empleador (EDD).

Español Tax Relief Help Call 1-877-970-7007

En Mike Habib EA, una compañia Californiana de ayuda para problemas de impuestos, entendemos que ser notificado que sus declaraciones de impuestos estan siendo inspeccionadas por el IRS o el estado puede ser intimidatorio. Cuando uno se encuentra frente a una auditoria o un proceso de coleccion por el IRS o el estado, uno no sabe que hacer o para donde voltear. Nuestra compañia cuenta con todas las habilidades y experiencia para negociar con el IRS o el estado en defensa suya. Nuestra compañia entiende las reglas y tenemos la experiencia adecuada para negociar la menor cantidad de dinero a pagar aprobada por la ley.

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.

CA RESIDENCY RULES & AUDIT

June 18, 2010 | Mike Habib, EA

CALIFORNIA FRANCHISE TAX BOARD

CA RESIDENCY RULES & AUDIT

RESIDENCY LAWS, TERMS, AND RESIDENCY CONCEPTS

Having Unfiled Tax Returns and need Help?

June 8, 2010 | Mike Habib, EA

Having Unfiled Tax Returns and need Help?

Taxpayers with unfiled tax returns can invite a lot of problems. The famous IRS has coined ten years for the collection of taxes that are owed. If the return for owed taxes was filed ten years ago, the IRS will probably use the last address known to them. The government will not be able to maintain any contact if you have already left the country. But if by any chance, you return back within the ten years limit, this can be a big problem. If you start earning or start with any job, it will be very easy for the IRS to contact you and then you are in big trouble. They not only claim the unfiled tax returns but all of the fines interest and penalties that have accrued over the original payment are also asked for. If you have somehow not at all bothered to file the tax returns, it is very important for you to have all the documents necessary to file your tax returns. Having lower income or lots of medical bills will not make any difference. It could simply lead to the conclusion that you probably are left with no money at all to pay for the mortgages or even the regular bills.

If anyone finds himself stuck in such serious circumstances it is strongly suggested that services of an experienced tax relief professional be asked. Only they will be able to guide you properly as to what is required to be done. They will be able to sort through all of the back taxes of past years and negotiate with the IRS to make some reasonable solution. The help of tax relief expert can invite many days of annoyance, severe deadlines or some difficult and confusing forms to be handled on your own. The tax relief specialist, as a professional will do his best to help you deal with the situation and come out of it successfully. He will be spending most of his time to sort out the best interest of the client and find a solution.

Back Taxes

June 2, 2010 | Mike Habib, EA

Back Taxes – How to get tax resolution

When one is undergoing financial problems and above all a number of tax bills that are due, the first thing that crosses ones mind is how to settle back taxes. Burden of tax debt is a complicated issue. This is so because if one does not pay the past due tax bills the amount keeps on doubling with time. Moreover, more interest and penalties are added to it. In the end, the rights of the taxpayer are no longer protected because then the tax collectors start intruding into person’s bank accounts and seizing all the property he has in his name. As each and every move is interlinked with the previous one which makes these back tax debts a complicated one. Thus, there is a dire need to settle back taxes and get peace of mind.

In order to settle tax debt a proper channel is required, that is, a legal tax relief representative such as an experienced Enrolled Agent can do a fine job in corresponding and negotiating with the IRS, or any tax agency. As it is seen, for every problem one needs to discuss the matter openly. Both parties look at their positive and negative points for each alternative resolution. Then a modified tax resolution is formulated which would be acceptable to both parties. This is how to settle back taxes.

Hardship Distributions in a 401(k) Plan

May 31, 2010 | Mike Habib, EA

Common Plan Mistakes – Hardship Distributions in a 401(k) Plan

The Problem

A 401(k) plan permits participants to receive hardship distributions. The distributions, however, do not satisfy the plan provisions relating to hardship distributions.

Example: George is the 100% owner of the George Company. The company sponsors a 401(k) plan which provides that a participant may take a distribution on account of hardship. The plan document requires that a participant may only receive a hardship distribution for the following reasons:

(1) to purchase a principal residence;
(2) to prevent eviction from, or foreclosure on, the principal residence;
(3) to pay certain medical expenses incurred by the participant, participant’s spouse, or dependents; and
(4) to pay certain educational expenses incurred by the participant, participant’s spouse, or dependents.

In addition, the plan document requires that the participant use all other sources of financing including proceeds from insurance, liquidation of other assets, and loans from other commercial sources before applying for a hardship distribution. Jim, a plan participant, asked for and received a hardship distribution of $20,000 from the plan. He did not provide a reason for the distribution and did not establish that he had used other sources of financing before applying for the hardship distribution.

Finding the Mistake

In order to find the mistake, review:

(a) the plan document to determine when distributions may occur;
(b) each plan distribution and its related documentation showing the reason for the distribution (e.g., distribution form signed by the participant indicating the reason for the distribution); and
(c) whether distributions designated as “hardship distributions” were made in accordance with the terms of the plan.

In the example above, Jim did not complete any distribution forms. The only documentation in the file was a note requesting a hardship distribution for $20,000. It was found that Jim used the money to buy a car. There was no evidence that he investigated other sources of financing.

This was an isolated instance. For each of the other hardship distribution requests, the participant was required to complete a distribution form. The distribution form required the participant to specify the purpose for the distribution (e.g., medical expense, education expense, purchase of residence) and to certify that other sources of financing (including insurance proceeds, disposition of other assets, or other loans) were not available to the participant. The distribution form was then submitted to the employer’s accountant, who evaluated the form before approving the hardship distribution to the participant. When Jim applied for a distribution, however, he went directly to George, who authorized payment without requiring Jim to complete the distribution form. Also, George was not familiar with the terms of the plan. As a result, he approved a distribution that did not comply with those terms.

Fixing the Mistake

The company should take reasonable steps to ensure that Jim returns the erroneously distributed amounts to the plan. Jim should also be advised that to the extent any amounts are not returned, they are not eligible for tax favored treatment (i.e., the amounts are not eligible for rollover to an IRA or other retirement plan). In addition, the plan’s administrative procedures should be revised to ensure that the error does not occur again. (See “Avoiding the Mistake” below.)

Correction Program(s) Available

The plan may use the correction programs described in Revenue Procedure 2006-27 to correct the mistake. If the plan is not the subject of an IRS examination, then the plan will generally be able to correct the mistake using either the Self-Correction Program (SCP) or the Voluntary Correction Program (VCP). If the plan is under IRS examination, then mistakes are generally corrected pursuant to a closing agreement under the Audit Closing Agreement Program (Audit CAP). However, if the mistake is an isolated instance (as is the case in this example), the mistake may still be eligible for correction under SCP.

Avoiding the Mistake

George should be familiar with the terms of the plan. A formal approval process had been installed to ensure that hardship distributions comply with the terms of the plan, including documenting the reason for the hardship and certification of the unavailability of other sources of money. George should be aware of the purpose of such a process, and understand the risks of approving distributions without following it. George should not approve distributions based on verbal or informal written requests, but instead, should follow the formal approval process before authorizing a hardship distribution. For more details on how to find, fix, and avoid this mistake, you may also refer to the online 401(k) Fix-It Guide.

We offer solutions to tax problems. Contact our firm today and speak directly with Mike Habib at 877-788-2937, or online at myirstaxrelief.com

IRS Tax Lien

May 7, 2010 | Mike Habib, EA

Tax Lien – How to handle an IRS federal tax Lien

A tax lien is a civil action filed in court of the county where a person resides or a business operates by a government agency particularly the Internal Revenue Service. IRS is seeking a legal claim – attachment against that person’s or business’ property or money owing to taxes. In normal situation, once the claim is proved, the court will then make an order of attachment or lien against the said property or money and published on public records. But in the case of the IRS, because of its federal power and the quasi-judicial status, it need not go to court for this process and issues directly a tax lien on the tax payer’s property. This means that it announces to the world that you owe the IRS taxes for which the property is being secured. The property that maybe subject of the tax lien can either be real which is most preferred, or personal. Once there is a tax lien on record, it becomes difficult or impossible for a taxpayer to dispose of the same and it will likewise affect the taxpayer’s credit standing. For example, the taxpayer cannot sell a parcel of land or a car subject of the tax lien nor can the taxpayer secure a financing to purchase a parcel of land or a car for that matter, unless of course, you satisfy the tax lien or until final payment is made on your liabilities or in short, the tax lien is released, discharged, withdrawn or removed.

Tax Liens are effective for a period of ten years and are generally self-releasing after that period unless refiled by the IRS in which case, it shall be effective for another 10 years. The government’s tax lien on a taxpayer’s property is priority over his other creditors and thus, the government is first on the list of creditors to be satisfied in the case of attachment and liquidation.