PHONE: 800-882-7494 or 407-562-1853 FAX: 407-562-2001 info@endtaxproblems.com
Many of the questions and IRS problems that occur are listed here. If you have a specific question that's not answered or need additional information, please contact us.
|
Common IRS Problems
|
When you sign a joint federal income tax with your spouse, you are obligating yourself to pay the entire balance owed, including penalties and interest and any later amount found to be due and owing after an audit. Every penny.
The "Innocent Spouse" provisions of the tax law were enacted by Congress to provide relief from liability of tax debt by a spouse when it can be shown that there was no knowledge of the tax debt. This is not easy to prove. That's why you need the assistance of a tax professional.
It is difficult because the spouse that is claiming protection must show that he or she had no knowledge of the tax deficiency and "had no reason" to know about it. The IRS and the courts have consistently ruled against people who claim innocent spouse losses if the claimant benefited from the underpaid taxes. This can be especially true if the claimed innocent spouse did not work. If the couple is no longer married or has been living apart for at least a year a new law may provide relief by allowing a couple to "undo" their joint liability. Top of Page
Undoing Joint Liability
If you are married, taxes can usually be saved by filing jointly. Depending on specific facts of each case, it is generally recommended that couples file separately to protect one spouse or the other through isolation. This allows them to amend their filing status from "separate" to "joint" to benefit their tax situation. You may not amend from "joint" to "separate." As of 1998 a new law allows one former spouse to "undo" joint liability if lack of "actual knowledge" of the tax deficiency is proven. In other words, where the innocent spouse provision causes loss if the claimant benefits, here the spouse wins the case if the claimant benefits as long as the claimant didn't actually know of the problem. Top of Page
Installment Agreements
The IRS is not so rigid that they do not realize that some people cannot pay their entire tax liability. That is why you are able to negotiate a monthly repayment schedule based on your ability to pay. Your case may be labeled "currently uncollectible" by the IRS. If this happens, you are assigned a "code 53" designation and are left alone until your situation improves. Penalties and interest continue to accrue, however until paid.
Negotiating a monthly installment agreement should never be done without an overall game plan in mind. We'll help you decide whether to pay the entire balance in full or embark on an aggressive repayment plan. We'll help you get any liens off the public record as soon as possible, if that's what you want or help you prepare for bankruptcy if this is in your plan. The idea is to have a plan. Top of Page
Offers In Compromise
The IRS considers only two types of offers. One is based on doubt of the taxpayers LIABILITY for the tax. The other is a doubt of the taxpayers ABILITY to pay the tax.
Offers based on doubt as to LIABILITY are used when there is some reason the taxpayer doesn't legally owe the debt. There are many options for this offer.
The more common is the offer based on doubt as to collectibility. When the taxpayer's assets and ability to make monthly payments over a five year period are insufficient to pay the tax debt, the IRS may be willing to settle the taxpayer's entire tax debt in exchange for a single payment. Generally this payment will be more than what the IRS would otherwise receive by seizing assets and waiting for monthly payments for five years. You may even be eligible to pay the offered amount over time. A trained professional can help you get the best settlement. Top of Page
Statute Of Limitations
There is a statute of limitations on the right of the IRS to audit your returns and its right to collect past due taxes from you. On audits (assessments) the statute of limitations is three years from when the return was filed or was due, whichever is later. This means that the statute period for audits never starts if a return has never been filed. The statute on collections is ten years from when the tax debit was assessed against you. Also, if an audit is conducted and additional taxes are found to be due, then these new tax debts are subject to their own ten year statute of limitations on collections. Both statutes can be extended if an Offer In Compromise is filed and not accepted, if a bankruptcy is filed, if the taxpayer is out of the country for at least six months or if the taxpayer voluntarily extends the statute. We can help determine when the statute of limitations will expire in your case. Top of Page
Bankruptcy Options: Chapter Seven
The most common type of bankruptcy. With Chapter Seven the debtor generally loses all assets, with the exception of certain "exempt" assets and eliminates all debt with the exception of certain "non-dischargeable" debts.
Individual states determine exemptions are allowed. Each state can either elect to follow the federal exemption statutes or draw up its own. For example, Florida exempts cash surrender of life insurance policies, annuities, certain wages and your home, among others. These and others, however, are not exempt from IRS claims!
Non-dischargeable assets include alimony, child support, student loans, debts obtained by fraudulent means and certain tax debts. Chapter Seven cannot eliminate an individual's debts for newer income taxes or civil penalties regardless of their age. Once income taxes age enough, they change from non-dischargeable to dischargeable. This makes it very important that you time your bankruptcy to take advantage of this feature. It may mean the difference between owing large debts to the IRS and owing nothing! We can give you this information after our first contact. Top of Page
Bankruptcy Options: Chapter 13
Unlike Chapter Seven where the debtors lose their assets and start over, Chapter 13 allows debtors to keep their assets in exchange for following a court-approved "plan" to repay all or a portion of their debts from future income for the next three to five years. The debtor's plan must provide for payment of all of his disposable income to his creditors every month. This monthly payment must be large enough to pay certain "priority" debts in full during the life of the plan.
Should you file Chapter Seven or Chapter 13? We can help you determine that too after a study of your financial situation. Top of Page
Unfiled Returns
Willful failure to file tax returns can result in a punishment of up to five years in jail and $100,000 fine. This is serious business.
First of all, if you're concerned that your tax situation might have criminal implications, be aware that conversations with people who are not lawyers ARE NOT PRIVILEGED.
Even without criminal implications, there are other questions:
- How many returns do you file?
- What happens if you've lost, misplaced or just don't have records for tax return preparation?
- Should you and your spouse file a joint return?
- What happens if you've lost your W-2 or 1099 tax forms?
- We are ready to help answer any question you have regarding unfiled returns.
We can also answer these questions:
- When your returns have been prepared, how much will you owe in tax, penalties and interest?
- Can you pay this debt?
- Should you submit an offer in compromise (link), file for bankruptcy (link), innocent spouse (link) or set up an installment plan (link).
Large Tax Debt
Penalties and interest on unpaid tax debts can build rapidly to a point that the debt becomes too large to pay. The IRS can make your life miserable once they decide to focus on collecting this debt. Everything in your life suffers. Sometimes the pressure can become unbearable to a point that people become incapacitated mentally and physically. Payment of the debt becomes all consuming. There are ways to stop the stress. Contact us now and we can help. Top of Page
Audits, Appeals, Litigation
Unlike matters of debt and collection, which have set procedures, you need an experienced tax law professional to handle these areas. We are ready to provide the resume of all our tax professionals to assure you that your case is being handled with the utmost professionalism. Top of Page
Fraudulent Activity
If your civil tax liability problem turns into a criminal tax problem (lying to a federal officer, submitting false documents, hiding or converting assets) your actions can quickly change your case from a financial matter to a criminal matter. Only a lawyer can advise you about what can and cannot be done. Top of Page
Stress and strain due to tax problems is not necessary
Fill out our FREE Consultation form today!