Tax Attorney and Tax Resolution Services: IRS Help Blog

Tax Expert Ponders GM-Facebook Ad Pull

TRS — Wed, 16 May 2012 23:50:35 +0000

I’m taking a break from tax issues as a certified tax resolution specialist to comment on an interesting news story that will have an effect on business advertising. Yesterday, a Wall Street Journal article GM Says Facebook Ads Don’t Pay Off announced that General Motors was going to stop advertising on Facebook claiming that their paid advertising on the site did little to influence consumer car purchases.

Analysts think this move by GM could inspire other businesses unsure of social media advertising, to also pull their Facebook ads. This would make it harder for the soon-to-be-public Facebook to court potential advertisers, shareholders and grow their business.

A Bloomberg article entitled Is Facebook Worth $100 Billion? provided more details about GM’s reasons for the ad pull. According to GM spokesperson, Pat Morrissey, the cuts were the result of a regular spending review, and in that review dollars get shifted around based on return on investment, priorities, and overall effectiveness. GM has said it will re-evaluate future display ads but that now it’s only Facebook presence will be on its brand-promotion pages.

Not all businesses including other car manufacturers report the same results as GM. Ford Motor Car Company and Subaru say they are “sticking with Facebook.” Subaru claims that Facebook generates a “cost effective fan-base” for their brand that boosts awareness of their product and generates traffic to their websites.

Companies that have success using Facebook and social media as part of their overall advertising strategy have usually done a better job targeting ads for their potential customers. Facebook’s unique “word of mouth at scale” marketing is the ace in the hole for the following reasons:

Advertisers get access to data for over 900 million users.
It provides strategic information about its users so that advertisers can target them directly.
It’s inexpensive compared to other advertising means such as TV.
The person to person, word of mouth nature of social media can build and enhance a brand because people are influenced by what their “friends like” and happily tell others. But this broad consumer reach can’t always be measured in traditional ways.

It’s likely that the executives at GM don’t get social media advertising and may not have been willing to target specific ads for a specific audience. For GM, television advertising still gives them the most bang for their buck and most return on investment of advertising dollars, and they are sticking with what they know. While most companies, including Tax Resolution Services, will be looking at their bottom lines and asking if social ads work, General Motors has already made their decision; they think not.

For the latest in IRS tax news, tax relief advice and information, check us out on the Tax Resolution University blog, on Twitter @taxresolution , Facebook and on our YouTube Channel.

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Tax Relief-Bankruptcy and Tax Debt

TRS — Wed, 16 May 2012 01:24:26 +0000

With the recession in its fourth year, financially distressed consumers are turning to bankruptcy as a means to wipe their financial slate clean including getting rid of their tax debt. However, what many do not realize is that not all tax issues are discharged in bankruptcy. A Bloomberg BusinessWeek article entitled Court says farmers must pay bankruptcy tax reported on a recent Supreme Court ruling that firmly stipulated there be no discharge of taxes for an Arizona couple in their bankruptcy tax case.

The case involved a 320-acre family farm in Wilcox, Arizona belonging to Lynwood and Brenda Hall that sold to settle the couples’ bankruptcy debts. The farm sold for $960,000 and yielded $26,000 in capital gains taxes. Hoping for some tax relief, the Hall’s requested the taxes be treated as part of the bankruptcy; paying part of it and having the other half discharged by the court.

The IRS objected, and so did the 9th U.S. Circuit Court of Appeals in San Francisco. The case traveled to the Supreme Court where in a 5-4 vote, the high court agreed with the IRS stating that all the taxes must be paid as part of the bankruptcy.

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 points to consider for those who may use bankruptcy as a form of IRS relief:

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 IRS taxes, IRS penalties and interest qualify for complete discharge in Bankruptcy, but strict rules governing this. A taxpayer’s income tax liability must qualify to benefit from the Bankruptcy laws and avoid paying income taxes.

Bankruptcy Is Not the Only Option.

If you are not facing big IRS tax problems, the Offer in Compromise program may be a much better option than tax relief bankruptcy. For example, 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 only major creditor is the IRS, a tax attorney or Certified Tax Resolution Specialist can help you consider options like an IRS installment agreement may work better based on your circumstances and other solutions you may qualify for.

Resolve Tax Bankruptcy-Hire Expert Tax Representation

In any case, bankruptcy is a complicated, legal and financial matter that should not be taken lightly. It is highly recommended that any taxpayer considering bankruptcy, seek out experienced legal counsel such as a tax attorney or Certified Tax Resolution Specialist with expertise in handling tax relief bankruptcy cases. These tax professionals can provide tax help in assessing whether you and your tax liabilities are eligible for discharge.

The following articles contain additional information regarding discharging taxes and tax relief bankruptcy:

How to Determine if Bankruptcy is a Viable Tax Relief Option for Resolving IRS Back Taxes

Bankruptcy Laws – Discharge Income Tax Debt

To Avoid Tax Issues-Americans Give Up Passports

TRS — Tue, 15 May 2012 01:20:41 +0000

There is little doubt that wealthy Americans are under scrutiny for tax collection. Nowhere is this more obvious than for those who have offshore bank accounts. More U.S. citizens living abroad are deciding to renounce their U.S. citizenship instead of facing IRS tax problems concerning new U.S. tax regulations namely the Foreign Account Tax Compliance Act (FATCA) aimed at curbing tax evasion.

The subject of renouncing citizenship made front page headlines just last Friday when 30 year old Facebook co-Founder, Eduardo Saverin announced he was giving up his. Since then, the news media has been busy speculating the reason, with most circling back to the same conclusion: he wants to avoid tax debt.

In her article Facebook Co-Founder Won’t Escape All U.S. Taxes By Renouncing Citizenship, Forbes’ Tax Girl, Kelly Phillips Erb concurred that Saverin’s U.S. citizenship renouncement was probably a calculated tax dodge in advance of the public offering (IPO) for Facebook (Saverin began this process in 2011.) She also provided a few more details about this case:

Brazilian-born Eduardo Saverin was neither born in the U.S. nor is he a resident. He moved to the U.S. as a young boy, went to Harvard, where he met Mark Zuckerberg and became Facebook’s first investor.
Those giving up their American citizenship, including Saverin are subject to certain reporting and tax requirements under U.S. tax laws.
Saverin will be subject to pay an “expatriation tax” because his net worth is $2 million or more on the date he expatriated.

According to the article, the assets a person takes with them when they exit the country are treated as though they were sold prior to leaving, with any gains realized had those assets been sold, subject to tax. Saverin’s are no exception. In his case, however, the value of his assets pre-Facebook IPO are still considerably less than their value will be after Facebook goes public.

Severin’s decision to leave is part of a recent trend. A recent article by Bloomberg/BusinessWeek entitled Wealthy Americans Queue to Give up Their Passports, reports that around 1,780 expatriates gave up their nationality at U.S. embassies last year, that figure up from 235 in 2008. The biggest problem, according to American Citizens Abroad (ACA), a Swiss based advocacy group, is that the U.S. government does not entirely distinguishing tax cheats from those American citizens who live and work abroad and use banking services on a day to day basis. Chief among the reasons American’s are relinquishing in their passports:

The U.S. is the only country that mandates its citizens file and pay taxes and even if they already pay taxes to the country they reside.
The government has made it a major priority to close the “tax gap” and is continuing to put pressure on European banks, specifically Swiss banks.
Foreign Account Tax Compliance Act (FATCA) that requires Swiss banks to track down its clients. Swiss and other European banks think it’s just too risky to deal with Americans abroad, making everyday banking nearly impossible.

With FATCA comes more U.S. regulation. FATCA law requires banks to withhold 30 percent from American clients who don’t disclose enough information to the IRS. These obstacles have many Americans living overseas weighing the cost of holding a U.S. passport, with some such as Saverin making the drastic decision to turn his in.

You don’t have to relinquish your citizenship to get IRS tax relief. If you have not yet disclosed your offshore bank accounts, it is important you do so immediately; failure to file the requisite reports can result in a fine of as much as $50,000!

Even if you missed the October 15, 2009, tax amnesty deadline for voluntary disclosure, you can still get tax help and possibly reduce severe IRS penalties on undeclared funds in overseas bank accounts. You are advised to hire a tax attorney or Certified Tax Resolution Specialist to take over all IRS communications, make the required disclosures, file FBAR reports and amend previous tax returns to bring you into compliance with an offshore tax settlement.

Tax Relief Weekly News Round-Up

TRS — Sat, 12 May 2012 02:05:05 +0000

This week’s tax relief news has been quite exciting especially for Tax Resolution Services.

Here are some of the highlights:

Tax Resolution Services-2012 Stevie Award Finalists for Business

I am extremely proud to announce that both Brian Compton and I have been selected as 2012 finalists for the 10^th Annual Stevie Awards. Brian was selected for Executive of the Year for Accounting, Banking, & Financial Services and I am a finalist for Maverick of the Year. Considering the recent turmoil felt throughout the tax resolution industry (from unscrupulous players who hurt customers with their false claims and damaged the reputation of the industry at large), it is great to be recognized as a maverick. It’s also fantastic to see Brian get proper recognition for his exemplary leadership. Award winners in our category will be announced on June 18 at the Marriott Marquis Hotel in New York. Stay tuned!

Tax Help-Amend Tax Return Errors

Errors on your most recent tax return? No problem, just amend it. The IRS anticipates 5.7 million amended returns this year, but it’s important taxpayers know what to do in order to prevent future IRS problems. Here are some guidelines to keep in mind:

To claim a refund, file IRS Form 1040X within three years from the original filing date.
Amended returns cannot be filed online and must be done manually.
Your first return must be processed before you file the amended version and you must wait until you receive the original refund before the second will be processed.
Complex returns should be prepared by a tax professional to avoid errors.
If correcting more than one year, file a different Form 1040X for each year you’re correcting and mail each form in a separate envelope clearly marking the year of the return on the top of the form and the envelope.

Tax Experts Give Free Webcast for Tax Practitioners

This last Wednesday, May 9^th Eva Rosenberg, aka the TaxMama® and I, the TaxMan joined forces to host a free webcast for tax practitioners entitled “IRS Practice: Overview of Collection Issues.” The webcast covered issues ranging from IRS payment plans to Offer in Compromise and delinquent tax returns. This program was designed to enable tax practitioners to expand their practice base to include IRS representation, collection practices and procedures.

Couple Liable for Tax Mistakes Married or Not

Past tax filing mistakes can be a nightmare for married or divorced couples. To the IRS, a couple is joint and severally liable for their tax debt. So even in divorce, they are responsible for any tax liabilities shared when they were together. Spouses just discovering the others’ shady tax reporting on their joint returns could get help through the Innocent Spouse Relief defense. Innocent Spouse relief can absolve a spouse who unknowingly signed the joint tax return of their current or former spouse and inherited their unknown back tax debt.

Payroll Tax Problems Come to a Town Near You

Businesses large and small are no strangers to payroll tax problems and but when the town of York, Alabama faced IRS tax issues due to unpaid payroll tax, it made the news. An article from WTOK.com Channel 11 entitled IRS Says York Failed to Make Payroll Tax Payments reported that IRS representatives met with city officials to discuss how quickly the financially challenged town was going to pay back their tax debt. Why would the IRS send a representative to this small town? The IRS assigns a higher priority for collection of payroll taxes or “trust tax”; non-payment is viewed as ‘theft.’ IRS penalties from non-payment of payroll taxes can “cascade” and double under the Trust Fund Recovery Penalty (TFRP) and accessed at 100% of what’s due.

Make sure to visit us on the Tax Resolution University blog, on Twitter @taxresolution, on Facebook and on our YouTube channel for more IRS tax news, advice and more.

Have a great weekend!

Tax Resolution Services-Finalists for 2012 Stevie Awards for Business

TRS — Thu, 10 May 2012 23:13:28 +0000

It’s a great day at Tax Resolution Services. I am honored to announce that both Brian Compton and I have been selected as 2012 finalists for the 10^th Annual American Business Awards, otherwise known as the Stevies. I was a nominee in 2009 and 2011 -while it’s great to be recognized again by the ABA, I’m especially happy to Brian receiving recognition for his outstanding leadership.

Brian was selected as a finalist for Executive of the Year – Accounting, Banking, & Financial Services category and I am a finalist for Maverick of the Year – an award that recognizes individuals affecting positive change within their company and their industry. In light of all the mayhem that happened in the tax resolution industry over the last year or so (no thanks to the unscrupulous players who make bodacious tax resolution advertising claims then took advantage of consumers), it is great to be recognized as a maverick.

The Stevie awards were created ten years ago to publicly honor and recognize the achievements and positive contributions of organizations and business people worldwide. In that time, it has now become one of the most coveted business awards. This year’s nominees include the CEO of Franklin Resources, Gregory E. Johnson and Bridgette Chambers, CEO of Americas’ SAP Users’ Group. Previous award winners include Steve Jobs of Apple Computer, and Ford Motor Company’s CEO, Alan Mulally.

I believe it’s unusual for leaders of the same company to be finalists at the same time. In our case, however, this dual nomination has significance because it highlights our mission to give the best tax help services to consumers with IRS debt. It also recognizes the national regulation and restoration work we believe in that legitimizes the tax problem resolution industry as a whole.

Award winners in our category will be announced on June 18 at the Marriott Marquis Hotel in New York. Thank you for letting me share this good news with you. Stay tuned to the Tax Resolution blog to find out the results!

Tax Help Tips-Amending Your Tax Return

TRS — Wed, 09 May 2012 21:21:52 +0000

If you recently discovered errors on your recent tax return, you don’t have to wait another year, just amend it. I just read two separate (but related) articles on how common it is to find errors after filing that address how taxpayers can amend their returns. Combined tips inspired by articles from the Orange County Register’s How to Fix Your Messed-Up Tax Return and Wall Street Journal’s How to Amend Your Tax Return follow.

It’s pretty common to amend a tax return and given the complicated tax code, it’s no surprise mistakes are made. The Wall Street Journal points to IRS projections that show it will receive more than 5.7 million amended returns this year. But it’s important to know what to do to prevent tax problems before you file again. Here are some simple tax help tips about amending tax returns:

If you are looking to claim a refund, file IRS Form 1040X within three years from the time you filed your original return. If the tax return is complex, you are encouraged to hire a tax professional to prepare it for you. Note: Amended returns cannot be filed online and must be done manually. A tax expert can give tax relief by making sure the amended return is prepared without errors.
If you are correcting more than one year, file a different Form 1040X for each year you’re correcting and mail each form in a separate envelope. Make sure the year of the return gets marked on the top of the form and gets indicated on the envelope.
Do not amend a return for simple math errors. The IRS will do that for you.
Wait until your first return has been completely processed before you file the amended version. Also, if you are entitled to an additional refund as a result of the error, the IRS suggests you wait until you receive the original refund. They also state you are able to cash the original refund check.
The normal processing time is about 8-12 weeks from the time the IRS receives the amended returns.
You may need to amend your state return may as well and are advised to contact the state tax office to find out.
Check the IRS website for helpful information 10 things to know about amending your return.

IMPORTANT: Definitely file an amended return if you omitted any income on your first return. You will be responsible for paying the taxes, interest and IRS penalties, on that under reported money, so it’s important to take care of IRS debt quickly before it becomes more complicated and expensive.

If you have under reported income and owe significant back taxes as a result, dealing with the IRS on your own is not advised. You will want to hire expert representation such as a certified tax resolution specialist to properly organize your records and help negotiate an IRS payment plan that can settle your IRS problems for good.

Tax Expert Leads Free Webcast for Tax Practitioners

TRS — Tue, 08 May 2012 21:58:49 +0000

Eva Rosenberg is known as the TaxMama®, giving out much needed tax information to those in trouble with the IRS and doing all of it with a mother’s touch.

Tomorrow, Wednesday May 9th at 12:00pm (Pacific) it’s time for me, the TaxMan to meet the TaxMama and deliver sound advice through a complimentary (that’s FREE) live webcast. The topic we’ll be focusing on is “IRS Practice: Overview of Collection Issues.”

If you would like to develop the skills to prevent and or resolve IRS collections actions then please don’t hestitate to attend this webcast. The 2 hour webcast is aimed at any proactive, current or prospective, Circular 230 practitioner who understands that the IRS is ramping up the “close the tax gap”. It includes of a broad overview of the collections process. From preparing the Power of Attorney – IRS Form 4868, to freezing the collection of activity, to Offers-in-Compromise and Appeals, the webcast will explore the numerous collection issues a practitioner may encounter.

Register for tomorrow’s complimentary webcast for tax practitioner’s HERE

Divorce, IRS tax issues and Innocent Spouse Relief

TRS — Mon, 07 May 2012 23:48:38 +0000

Going through a divorce is difficult enough. Settling financial matters with your ex (or soon to be ex-spouse) can be tough to accomplish…but in order to avoid future IRS tax issues; necessary. To help with divorce and IRS stress, I wanted to share a Reuters article called Tax Planning for The Divorcing and the Newly Divorced provides information on the most common tax planning questions so couples can begin to extract their commingled finances.

Couples need to be aware that any past tax filing mistakes can come back to haunt them whether married or divorced. For better or worse, a spouse inherits their partner’s tax history, even as the marital bliss fades, the couple’s tax liability will not.

The IRS views couples as individuals and holds both taxpayers responsible (joint and severally liable) and will try to collect taxes, penalties and interest from both parties even if a divorce decree states one spouse’s responsibility for the taxes.

If you are recently divorced, in the process (or still married), and just discovered your spouses’ shady tax reporting on your joint returns, your solution could be through Innocent Spouse Relief. Innocent Spouse Relief can absolve a current or former spouse who unknowingly signed a mistake-riddled joint return and inherited their spouse’s tax debt. Through Innocent Spouse tax relief you may not have to pay IRS back taxes, interest, and IRS penalties related to your spouse (or former spouse). However, you must be able to prove the following:

You did not share bank accounts and had no access to his/her account activity.
Your spouse had a separate business that was operated independently of you.
Your lifestyle did not benefit from the extra money from fraudulent tax reporting.
You filed a joint tax return with an understatement of tax.
The tax understatement was due to erroneous items of your spouse.
You must be able to establish when you signed the joint return, you did not know about the understatement of tax.
Considering all of the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.

Note: Innocent Spouse defense is complex and difficult to obtain because the burden of proof is on the taxpayer to prove their case. It’s best to seek professional help to determine your specific needs but do so quickly. You are required to request IRS Innocent Spouse Relief within 2 years after the date the IRS collection activity began. Generally, hiring a tax attorney or a Certified Tax Resolution Specialist to help you file for innocent spouse protection can increase your odds significantly of ensuring a positive outcome.

IRS Payroll Tax Problems Claim Alabama Town

TRS — Mon, 07 May 2012 17:44:54 +0000

Small business is no stranger to payroll tax problems, but when a city becomes a victim, it makes headlines. An article from WTOK.com Channel 11 entitled IRS Says York Failed to Make Payroll Tax Payments reported that a representative from the Internal Revenue Service traveled to York, Alabama to meet with city officials to discuss their specific tax issue: unpaid payroll taxes.

It appears that the city administrator, Tim Sweezey and Mayor, Glenda Dubose first found out about the city’s IRS problem in October of 2011 after they discovered the city clerk (no longer employed by the city) stopped making payroll tax payments to the IRS and never informed anyone. The clerk also did not reconcile the books so there was no proper accounting as to how much the city actually had.

The IRS is seeking from the city of York all unpaid payroll taxes, plus penalties and fines for the end of 2010, all of 2011, and the beginning of 2012. The unpaid payroll taxes for 2011 alone are $41,000. York, like many cash strapped municipalities and has been delayed in settling their tax debt matter primarily due to lack of funds. The city has hired an accounting firm to help, but funds to pay them are scarce, so their IRS issues will remain ongoing for quite some time.

Payroll tax issues are very serious mainly because the IRS assigns a higher priority to collecting them. Here are some reasons why:

Money collected from employees in the form of payroll withholdings is considered by the IRS to be in trust by you until the tax payment is due and monies are turned over to them. Because it’s considered a trust tax, the IRS views non-payment as ‘theft’ and speeds up the IRS notice process.
Small business is the largest contributor to the annual tax gap; the amount of taxes owed but not paid due to noncompliance of tax laws. The IRS has stepped up efforts to narrow this gap, so anyone who is payroll tax delinquent gets “red flagged” for payment and steep penalties. Beware: IRS penalties from non-payment of payroll taxes can double under the Trust Fund Recovery Penalty (TFRP) and can be accessed at 100% of what’s due.

Even in tough economic times, small businesses (or cities for that matter) are wise to so their best to keep the IRS at bay. Here are some ways to do that:

Don’t be tempted to use the money collected from payroll taxes to pay operating expenses.
Stay current on employment taxes and make regular a federal tax deposits (by tax filing service, phone, or in person at a bank) 3 days after the pay date of the payroll checks. Remember: non-payment of payroll taxes can be seen as theft, which accelerates the IRS notice process and become very expensive, very quickly.

If payroll tax problems persist, it is wise to seek tax relief support from a tax attorney, CPA, or Certified Tax Resolution Specialist, who can help you set up a suitable IRS payment plan that keeps your business running and get rid of your tax debt issues for good.

Sales Tax Issues-Amazon & Texas Face Off

TRS — Thu, 03 May 2012 02:11:32 +0000

A recent blog post mentioned an article I wrote entitled “The E-Commerce Conundrum: Taxing Virtual Businesses and Their Investors and the Law”. In that article, I discuss at length the tax issues e-commerce and virtual business face, specifically tax pressures from state governments interested in capturing sales taxes from them. Well, this week the Houston Business Journal featured an article Amazon, Texas comptroller negotiating sales tax deal that demonstrates how quickly the virtual business landscape can change.

According to the article, Susan Combs, Texas Comptroller of Public Accounts, and Amazon.com are working to resolve the following tax problems:

Amazon’s tax bill for $269 million for uncollected sales taxes
Disagreement over future sales tax collection

According to the article, Amazon was given the bill for $269 billion in September 2010 that reflected uncollected taxes for sales from 2005 to 2009. The grounds for the assessed sales tax debt is that the Seattle-based Amazon has a distribution center in Irving, Texas, thereby having a physical presence in the state and therefore obligated to pay sales tax. According to Coombs’ estimates, Texas loses about $600 million a year from untaxed online sales.

After receiving the $269 million assessment, Amazon threatened to divest in Texas by:

Closing the Irving facility.
Eliminating 119 jobs due to the facility closure even after proposing in 2011 to add up to 6,000 jobs in the state.
Ending proposed plans to invest further in Texas including investing up to $300 million over three years.

A tax resolution between the two parties appears to hinge on a request by Amazon for a 4 ½ year exemption from sales tax collection on online sales in Texas in exchange for keeping business in the state.

As previously stated, as a tax debt resolution expert, I have yet to assist clients with auditing or legal issues regarding e-commerce laws, but it appears the tide is changing. The tax resolution reached by Amazon with the state of Texas over back taxes will most certainly impact the future of e-commerce and it won’t be long before there is an increase in IRS audits for e-commerce businesses due to unpaid sales taxes. I also predict a surge in lawsuits and a need for IRS tax relief as small businesses attempt to interpret the ever-changing and complex United States tax code.