Citing a TMZ article, the Source reports that Knowles failed to pay $485,575.95 in taxes in 2010 and $728,004.89 in 2011. His total IRS tax debt is a whopping $1,213,580.84.

This information is not meant to make light of Mr. Knowles’ serious tax situation. It’s to demonstrate that when it comes to paying taxes, the IRS does not give special treatment to celebrities or the wealthy.

Taxpayers who owe more than $20,000 to the IRS need to know they are not alone in having IRS issues – nearly one in six Americans has a tax problem. The good news is that there are options struggling taxpayers can take today to get the tax relief they need. The first step is to contact a certified tax professional or IRS tax attorney for a free consultation to find out what your options are. These IRS problem solvers will look for solution to potentially reduce what you owe, and lift the tax burden from your shoulders to help resolve your IRS tax issues for good.

Related posts:

1. IRS Guidelines Help More Innocent Spouses
2. Finding Tax Help for IRS Tax Debt
3. IRS Bankruptcy-Five Tax Relief Options for Back Taxes

The IRS Gets Scrutinized – By far the biggest IRS story this week revolved around the IRS itself! The agency is being closely examined for unfairly targeting conservative and tea party groups for extra scrutiny of their 501(c)(4) tax exempt status. As I sorted through the blizzard of articles of varying opinions, I found the following two interesting reads:

• Via @BostonGlobe IRS says audits of conservative groups out of line
• Via @AccountingToday Outgoing IRS Chief Miller Denies Targeting at Congressional Hearing

Tax Fraud - The post Tax Case: Louisiana Lawyer Files False Tax Refund Claim explains the case of Louisiana lawyer, Francis C. Broussard, 53, of West Monroe, La., who pleaded guilty to making false, fictitious and fraudulent claims to the IRS in an attempt to receive more than $9.7 million in tax refunds. For these false claims, Broussard faces up to five years in prison and a $250,000 fine.

Offer in Compromise Program Can Provide Needed Tax Relief – A client question titled: “IRS Question: How Do I Qualify for the Offer in Compromise Program?” The Offer in Compromise (OIC) is a helpful tool for consumers who owe a substantial amount to the IRS but who would not be able to pay off their tax debt, and lack the earnings to do so even over time. However, not everyone qualifies for the program. A qualified tax professional can determine eligibility, exactly how much money the taxpayer owes, and then negotiate an IRS tax settlement on their behalf – resolving their tax debt for good.

Tax Client Saves Over $100,000 Through IRS Offer in Compromise – This month’s clients, Mr. & Mrs. Ford Sr. owed the IRS $112,000 in back taxes when came for tax help. The Fords were good candidates for an Offer in Compromise and through that program; they saved over $108 thousand dollars!

IRS Question: Can I Erase Tax Debt in Bankruptcy? This question is one I hear a lot. Financially distressed consumers are turning to bankruptcy as a means of getting rid of tax debt. While the IRS does not like to mention bankruptcy as a way to remove tax liabilities, many taxes, IRS penalties and interest qualify for complete discharge in bankruptcy. The good news is that struggling taxpayers have some tax relief options. Here are some points to remember about bankruptcy:

• If your entire debt consists mostly of creditors you are having difficulty paying and very little IRS debt, bankruptcy may be your best option.
• If your major creditor is the IRS, the Offer in Compromise program may be a better option than tax relief bankruptcy. A tax attorney or Certified Tax Resolution Specialist can help you consider all options and solutions like an IRS installment agreement that may work better for your financial circumstances.

Criminal Investigations Are Going Up – The post: IRS Criminal Investigation Report Shows Increases highlights the release of the Annual IRS Criminal Investigation (CI) Report for 2012 that shows strong increases in enforcement actions and IRS penalties imposed on convicted tax criminals. It’s no coincidence the number of CI cases has increased in the last few years – the government needs money and has given the IRS the authority to go after tax cheats with a vengeance to collect. All the more reason to resolve IRS tax issues before they get to the criminal stage.

Have a great weekend!

Related posts:

1. IRS Helps Unemployed Avoid Penalties
2. Tax Relief-Bankruptcy and Tax Debt
3. Prevent Tax Scams-Abuse of Charitable Deductions

According to court records, Francis C. Broussard, 53, of West Monroe, Louisiana, had his accountant prepare his 2005 through 2007 tax returns — but Broussard never filed them.

In 2009, Broussard went to a different tax preparer to have his personal tax returns prepared for 2005 through 2008. Broussard brought already-prepared federal tax returns along with a separate piece of paper with a set of numbers on it. He instructed the preparer to file the return based on his numbers, which claimed a multimillion-dollar refund.

Broussard faces up to five years in prison and a $250,000 fine.

Related posts:

1. $1 Million Tax Evasion by Owner of Cinemas
2. Filing False Tax Returns Lands Woman 33 Years in Prison
3. For Filing False Tax Return, A Possible Year in Prison

Answer: The Offer in Compromise is a great program for consumers who owe a substantial amount to the IRS but who cannot pay off their tax debt, even if given time. There are many reasons taxpayers find themselves in such a situation — medical problems, career change, poor financial decisions, etc.

No matter the reason, the Offer in Compromise can provide a great way to settle your tax debt once and for all, assuming you qualify for the program. Now, when I talk about the Offer in Compromise, I think it helps to explain the context and why the IRS allows consumers to submit compromise offers.

For years, the IRS was known for its aggressive, maybe even call it “bare-knuckled,” approach to tax collection. But the tax-collecting agency soon realized that knocking on doors to collect taxes wasn’t as effective as being flexible. Enter the Offer in Compromise.

For taxpayers who qualify — and you must show that you lack the earnings and assets to pay off your tax debt, even over time — the Offer in Compromise allows consumers to negotiate a settlement offer that eliminates their tax debt once and for all. A successful Offer in Compromise can reduce your tax debt by a significant amount.

It’s impossible to tell if you qualify for the program based on the information you provided alone. So your first step should be to consult a qualified tax professional who will analyze your previous returns with a fine-toothed comb, determine exactly how much money you owe, and then take your case to the IRS and negotiate on your behalf for the Offer in Compromise.

At Tax Resolution Services, we are IRS problem solvers. For a free, no-risk consultation, please call our office at (888) 699-7630.

Related posts:

1. Settle Tax Debt with the IRS Offer in Compromise Program
2. Pay Off Tax Debt with Offer in Compromise or Installment Agreement?
3. Ask the Tax Resolution Expert: The IRS Offer in Compromise or Installment Agreement Programs May Be Your Tax Debt Solution

Answer: This is a great question, and one I am asked often. With the recession in its fifth year, financially distressed consumers like you are turning to bankruptcy as a means of wiping their financial slate clean including getting rid of tax debt. The good news is that you do have some tax relief options regarding bankruptcy discharges of tax debt. There are three general rules that must be met in order to discharge income taxes:

1. The tax liability must be 3 years old or older from the “due date” of the return, including extensions.
2. The tax returns themselves (Substitutes for Returns are not eligible for discharge) had to have been filed at least 24 months before the petition date.
3. 240 days must pass from date of assessment. There are certain events that can “toll” (stop) the 240 day “clock”.

While not all bankruptcy cases result in a complete discharge of debts; there are instances where IRS tax debt can be discharged through tax relief bankruptcy.  Here are some guidelines for you to consider, including other means of debt relief that bankruptcy:

IRS Tax Debt Erased in Bankruptcy-Strict Rules Apply

The IRS does not like to mention bankruptcy as a way to remove tax liabilities, but many taxes, IRS penalties and interest qualify for complete discharge in bankruptcy. The catch: there are strict rules governing this. Changes to the Consumer Bankruptcy Law in 2005 affect the ability to discharge income taxes. As a result, the IRS uses rigorous criteria to determine if the taxpayer’s income tax liabilities qualify for forgiveness.

Bankruptcy Is Not the Only Option

If tax issues are not your main issue, the Offer in Compromise program may be a better option than tax relief bankruptcy. Here are some guidelines to consider:

• If your entire debt consists mostly of creditors you are having difficulty paying and very little IRS debt, bankruptcy may be your best option.
• If your major creditor is the IRS, a tax attorney or Certified Tax Resolution Specialist can help you consider options like an IRS installment agreement or offer other solutions that may work better for your financial circumstances.

Resolve Tax Bankruptcy-Hire Expert Tax Representation

Bankruptcy is a complicated, legal matter that should be seriously considered because your financial life is on the line. I would encourage anyone faced with bankruptcy to seek out experienced legal counsel such as a tax attorney or Certified Tax Resolution Specialist with expertise in handling tax relief bankruptcy cases. These qualified tax professionals will assess your tax liabilities and determine if you are eligible for a full discharge. If that is not a viable option, they will also suggest other IRS solutions to help you get your financial life back on track.

Related posts:

1. IRS Bankruptcy-Five Tax Relief Options for Back Taxes
2. Tax Relief-Bankruptcy and Tax Debt
3. Delinquent and Unfiled Tax Returns? 8 Steps to Resolving Them

Richard Weber, Chief of Criminal Investigation believes the key to CI successes is “perseverance and dedication to working complex financial investigations aimed at stopping tax fraud, identity theft, offshore tax evasion, public corruption, money laundering and other financial crimes.”

Here are some highlights from the 28 page report:

• Initiated investigations and prosecution recommendations: both up nearly 9 percent in fiscal 2012 compared to 2011.
• Filings of indictments and other charging documents: up 13 percent.
• Convictions and those sentenced both gained roughly 12 percent from the prior year.
• Criminal investigation initiations totaled 5,125 cases in fiscal 2012
• Completed investigations were 4,937 – up 5 percent from fiscal 2011.
• Convictions totaled 2,634 in fiscal 2012.
• The conviction rate saw a slight increase to 93 percent.

It’s no coincidence the number of CI cases has increased in the last few years. Due to the prolonged recession, the government needs money and has given the IRS the authority to go after tax cheats with a vengeance to collect. All the more reason people with IRS tax issues need to come forward to resolve them before they get to the criminal stage.

If you have significant tax debt, have unreported offshore bank accounts, or are under audit, don’t face the IRS alone – you are out of your league. Your best defense will be to consult a certified tax resolution specialist, tax audit expert, or tax attorney to navigate the complicated IRS waters and help you negotiate an IRS tax settlement that lets you get on with your life.

Related posts:

1. IRS Releases 2012 Data Book
2. Tax Relief Weekly News Round-Up
3. Treasury Proposes Multilateral Agreement for Offshore Compliance

This month’s Tax Client Of The Month is Mr. & Mrs. Ford Sr.

Mr. & Mrs. Ford Sr. owed the IRS $112,000 in back taxes when he sought help.  After several months of negotiations, we were able to settle his debt for just $3,662 through the IRS’s Offer in Compromise program*.

You might be our next Tax Client Of The Month too!  Watch for your name in our tax blog in an upcoming month.

Thanks for the Kind Words from our Tax Client of the Month:

“I just wanted to write and let you know how much I appreciate all the hard work you did in solving my IRS Problems.  You and your staff were very professional and helpful.  I couldn’t have done it without you!”

- Mr. & Mrs. Ford Sr.

* The IRS’s Offer in Compromise program is a privilege, not a right, and not everyone qualifies for it. If you have back taxes, contact a qualified tax professional to determine if you qualify for the Offer in Compromise program. If you do not, there are other tax relief options such as the IRS Installment Agreement which is an IRS Payment Plan.

Related posts:

1. Tax Client Saves $45,000 with Offer in Compromise
2. Tax Client Saves Over $30,000 with Offer in Compromise
3. Got Back Taxes? The IRS Payment Plan or Installment Agreement Can Help

This week started with a helpful post titled: Tax Relief Tips for How Long to Keep IRS Records. A general rule of thumb guideline suggests that tax records be kept for three years. However, there are some exceptions where records must be kept longer or even indefinitely such as:

• Taxpayers who underreported more than 25% of their gross income
• Taxpayers who filed fraudulent returns or did not file at all
• Taxpayers with property deductions
• Businesses with Employees

Important note: Make sure your check with your tax professional before getting rid of important records. If your tax pro says it’s ok and your files are really, really old go ahead and shred.

Celebrity Tax Woes Abound – As I have said before, the IRS does not discriminate – it goes after millionaires, celebrities and average taxpayers equally if they believe them to be cheating or not paying taxes. Here are two celebrities who learned this first hand:

Singer Lauryn Hill Gets Three Months in Jail for Tax Evasion – Actress and award winning singer – Lauryn Hill was sentenced Monday to three months in prison plus three months home confinement for failing to file tax returns for five years and not reporting more than $2.3 million in income. Hill stated she had always meant to “eventually” pay her tax debt but was unable to during a period of time when she dropped out of the music business. Last year on her Tumblr account, Ms. Hill claimed that she went “underground” as a means of survival but did not “deliberately abandon” her responsibilities (meaning her IRS tax debt). Naturally, the IRS did not see it that way.

Actor Stephen Baldwin Guilty of Tax Charges – Stephen Baldwin pleaded guilty to failing to file his income taxes for three years and was ordered to pay $300,000 in back taxes to the government. Baldwin, the youngest of the Baldwin brothers, blamed his tax troubles on mistakes made by professionals he hired to manage his affairs while he was away shooting the reality TV show Survivor.

This week’s post titled: For Those with Tax Debt, Solutions Are Available was an appeal to those who haven’t addressed their tax troubles that it’s time to see a qualified tax professional to get to know your options. Sometimes people just need to know they are not the only ones facing IRS stress. To help them understand that cases like theirs are resolved every day, I highlighted the success story of a client named Bill.

Bill was reluctant, scared and overwhelmed by his IRS tax debt issues. As one of my newest clients, Bill was certainly one of my most nervous. He explained that his business had gone under as a result of the economic recession and due to some bad tax advice, he not only owed IRS back taxes, he was worried that not everything had been reported. The good news is that Bill is now on the road to tax recovery because of the strategies we employed, primarily our IRS negotiations that resulted in him entering into an Offer in Compromise agreement. This significantly reduced Bill’s IRS debt and gave him a fresh start.

IRS Prepared Tax Returns: Are They a Good Idea? I decided to compose a post based on being asked what my thoughts were about the IRS’ proposal to pre-prepare tax returns. Read the post for my entire commentary but my bottom line is this: this recent IRS press push appears to me to be a way for them to garner support for how the new system will decrease of audits. The idea of “fill in all the line items received from third party and self-accept the way it comes across” just does not sound like a viable solution. The proposed system also seems like a ploy to raise an inordinate amount of money to fill government coffers.

Have a great weekend!

Related posts:

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Here are some of the benefits the article highlights:

• The “return-free” system would allow taxpayers to accept or correct their IRS-prepared returns before paying any tax due or requesting a refund.
• This system could be good for someone with a simple W-2 who takes the standard deduction and has no asset transactions. These taxpayers could save money because of not having to purchase tax software, hire an accountant or spend hours preparing a return.

Here are some of the downsides of this system the article mentions: (notice the longer list)

• The IRS is prone to errors and that are difficult enough to correct using the current system.
• The complexity of the tax code and a simplistic IRS prepared returns system could create major tax problems, especially for those with more complicated tax returns.
• Some taxpayers could see their marginal tax rates changing and find themselves paying more taxes if the IRS prepared their returns due.
• The IRS may need to hire additional staff to prepare returns. If that’s the case, the government may need to raise taxes to cover this expense.
• Under-informed taxpayers may not know they would be able to calculate their own tax bills. According to Forbes, if the IRS calculation doesn’t factor in every exemption, deduction or credit a taxpayer is entitled to, those taxpayers could pay more.

As the Forbes article states, the IRS already has a system for filing returns on behalf of taxpayers – it’s called an “SFR” (Substitute for Return). However, SFR’s are prepared with the government’s interests in mind, not taxpayers. Meaning they will overstate what taxes, IRS penalties and interest owed and will only take one standard deductions and one personal exemption. The concern is that if the voluntary IRS-prepared returns were similar to the Substitute for Return (SFR) system, it could create IRS problems by overcharging taxpayers who accepted their pre-filled returns instead of adjusting them to account for the exemptions, deductions and credits they were entitled to but that the IRS didn’t know about.

The IRS has been throwing around this idea for few years and it seems that this recent press, is just a way for them to to receive support of this new system’s decrease of audits. This idea of “fill in all the line items received from third party and self-accept the way it comes across” just does not sound like a viable solution any way you look at it.

This proposed system looks like a way to raise an inordinate amount of money because the government needs it.  Collecting money based on inaccurate tax returns, however, is the worst “solution” especially since the IRS thinks they can do more with less from government standpoint. Trying to straighten out any and all tax issues would be a nightmare.

Sadly, the American taxpayer will be the ones who suffer and experience the setback of this “system,” not the benefit.

Related posts:

1. Tax Help Tip-Avoid the Delinquent Tax Return Trap
2. IRS Tax Help Basics for the Self-Employed
3. Michael Rozbruch Interviewed in Opportunist Magazine

———————————-

I remember his face, clear as day.

Panicked — that’s the only word to describe it.

I shook his hand; it was a clammy. He was nervous.

For the sake of this column, I’ll call him Bill. At the time, he was my newest client.

Bill was holding a copy of my newsletter, The IRS Times & Inquirer, and some of the stories about people being sent away to prison for cheating on their taxes had scared him.

He pointed to a story about a doctor who underreported his income and was sent to the big house for six months.

“Six months!” he said. “In prison!”

I urged him to calm down, and we got him a bottle of water.

“Tell me about your concerns,” I said.

Bill explained that his business had gone under as a result of the economic recession, and due to some bad tax advice, he not only owed money to the IRS but also was concerned that not everything had been reported.

He knew he hadn’t willfully cheated on his taxes, so he wasn’t concerned about prison so much as how he was going to pay back what he owed.

“My tax debt just seems insurmountable,” he told me.

Now, let’s fast forward.

The good news: Bill is on the road to tax recovery. We went through his previous returns, corrected errors, and then presented our case to the IRS. We told tax agents that Bill wanted to come clean; he wanted to get out of tax debt.

As a result of our negotiations with the IRS, we entered into an Offer in Compromise agreement that reduced Bill’s tax debt by a significant amount and now he has a fresh start with his taxes.

And the truth is, Bill’s story is not uncommon.

While it’s true that there are many, many examples of people who are sent to prison or fined tens of thousands of dollars for not paying their taxes — or, worse, cheating on their taxes — there are the examples like Bill’s that you do not hear about.

There are examples of people who have made mistakes, owe huge sums of money to the IRS, and through careful negotiations with the help of a qualified tax professional, are able to eliminate their tax debt and move on to an easier-breathing chapter of their lives.

I’m reminded of Bill’s story, because last month, millions of Americans filed their taxes.

Many of these consumers won’t think twice about their returns. Some will get refunds; others will pay a modest amount, perhaps.

But there are many Bills out there — people who file their taxes with dread, people who owe money to the IRS, people who are concerned that one day soon the taxman will knock. For them, this uneasy feeling doesn’t go away until they address their tax problems.

Are you a Bill? If so, maybe it’s time for you to see a qualified tax professional.

———————————-

This article was written by Michael Rozbruch who is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA.  You can contact him at (888) 699-7630 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.

Related posts:

1. IRS Offer in Compromise Offers an Option to Resolving Tax Debt
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3. Settle Tax Debt with the IRS Offer in Compromise Program