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Wednesday, September 30th, 2009
Payroll tax problems can close a business overnight and lead to criminal sanctions including prison time. As the IRS grows increasingly aggressive in their collection attempts for past due payroll taxes, struggling business owners with delinquent payroll taxes need to know how to protect the future of their businesses.
Read on for the biggest mistakes small business owners make when dealing with payroll tax problems:
- Ignoring potential payroll tax penalties. The stakes are huge – along with being hit with hefty delinquent payroll tax penalties, many business owners with delinquent payroll taxes have found their business’s doors padlocked overnight and facing criminal sanctions including prison time. And with the federal government looking for ways to fund deficit-reduction activities as well as close the growing tax gap, the IRS is taking a closer look at employment tax returns, and stepping up increasingly aggressive efforts to collect unpaid payroll taxes.
- Talking to the IRS before talking to a professional tax attorney or tax resolution specialist. Oftentimes business owners who take matters into their own hands may self-incriminate during their conversations with IRS agents and make their payroll tax problems even worse. An experienced professional will truly understand what makes your businesses tick and will make sure that you have the cash flow and ongoing business necessary to keep your doors open. With no other sources of working capital, your company will go out of business when you can’t pay rent, utilities, and other operating expenses – it would be just a matter of time.
- Not taking payroll tax penalties seriously enough. IRS levies on your bank accounts and wages can cause you to lose your business. Payroll tax problems can be the “kiss of death” for many business owners. IRS penalties from delinquent payroll taxes can add up to about 33% PLUS interest in just 16 days after you have filed the 941 (payroll tax return) past the due date and didn’t pay–this will drastically equate to a large sum if you ignore the problem for a prolonged period of time.
- Wasting time. Since the IRS is very aggressive collecting delinquent payroll taxes, you need to come up with a way to pay them off fast. The IRS can levy a Trust Fund Recovery Penalty (TFRP) that imposes a 100% penalty on responsible third parties for delinquent payroll tax penalties. This is considered a civil penalty that only applies to collected taxes (like Social Security) and withholdings and does not apply to the employer’s portion of FICA, Medicare, 940 taxes or income taxes of the corporation.
- Risk your personal liability to payroll tax debt. If the IRS can prove that you were willful and intentionally didn’t file and/or pay your employment taxes, it may be considered a federal crime. One or more persons may be assessed with the delinquent payroll tax penalties from the IRS for delinquent payroll taxes – they can be assessed jointly and incur several liabilities. You do not have to be an officer of the company to be liable.The IRS is the most aggressive collection agency with the ability to pierce the corporate veil and go after the owners/shareholders/members individually. Liability for delinquent payroll tax penalties can be assessed against CPAs, EAs, accountants, and bookkeepers.
Don’t let the IRS levy your funds and take control of your cash flow – contact a tax resolution specialist to resolve your payroll tax penalties so that you can avoid the long-term devastation they can cost your company.
If you’re already in trouble with the IRS for delinquent payroll tax penalties, what do you do next? Don’t panic. Just keep in mind that there’s a solution to every delinquent payroll tax problem. Whether you owe $700 or $7 million in delinquent payroll tax penalties, you can find a way out, sometimes for a small fraction of what you owe, sometimes without paying a dime. The key is contacting a tax resolution professional as soon as you can. A consultation with a good tax attorney or tax resolution specialist can turn your delinquent payroll tax nightmare into a distant memory so you can go back to the business of your small business, creating the American dream.
Learn more about how you can protect your business from payroll tax problems.
Call us at 1-866-IRS-PROBLEMS or 1-866-477-7762. Tax Resolution Services will help you find tax relief!
Tags: Back Taxes, delinquent payroll tax penalties, delinquent payroll taxes, IRS debt, payroll tax debt, payroll tax penalties, Payroll Tax Problems, small business payroll taxes, small business tax debt, tax attorney, tax help, unpaid payroll taxes
Posted in Back Taxes, Offers in Compromise, Payroll Tax Problems, Seeking Professional Tax Help, Tax Liens and Levies, Tax news and tips | 1 Comment »
Wednesday, August 19th, 2009
With the recent surge in IRS enforcement, small businesses have become a major target for the government. The staggering annual $345 billion tax gap can be largely attributed to small business tax evasion; much of this has been because small businesses are difficult to enforce and many can manage to slip through the tax cracks by underreporting actual income.
Therefore, the IRS has shifted into high gears to catch and penalize small business owners for unpaid taxes–especially for delinquent payroll taxes. While in the grand scheme of things, it may be sensible for the government to close down on the tax gap, the trouble with the new tax collection trend is that many small businesses are actually struggling in this grimy economy and not deliberately trying to evade taxes. Oftentimes what may superficially appear to be blatant tax evasion may simply be a small business owner trying to pay the electric bills by tapping into his/her payroll tax fund.
Considering how vital small businesses are to the American economy, it is surprising how harshly the IRS plans on going after them. According to the Small Business Administration, small businesses:
* Represent 99.7 percent of employer firms.
* Employ about half of all private sector employees.
* Pay nearly 45 percent of total U.S. private payroll.
* Have generated 60 to 80 percent of net new jobs annually over the last decade.
* Create more than half of nonfarm private gross domestic product (GDP).
* Hire 40 percent of high tech workers (such as scientists, engineers and computer workers).
* Are 52 percent home-based and two percent franchises.
* Made up 97.3 percent of all identified exporters and produced 28.9 percent of the known export value in FY 2006.
* Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the one percent most cited.
Source: U.S. Dept. of Commerce, Bureau of the Census and International Trade Administration; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/rs225tot.pdf); Federal Procurement Data System; U.S. Dept. of Labor, Bureau of Labor Statistics
For business owners who have found themselves in IRS trouble, it is important to know that the IRS considers you to be guilty until proven innocent. This means the burden of proof is on you as the taxpayer to show the IRS that there was an excusable cause for your delinquent taxes. The “guilty till proven innocent” motto is troublesome because for business owners who fail to provide convincing proof, the IRS has unyielding power and authority to collect unpaid payroll taxes–even if it means padlocking front doors and shutting a business down completely.
This is why it is very important to seek tax help from a professional tax attorney in order to fight your battle with the IRS. Oftentimes, a tax attorney’s expertise can make the difference between a business’s survival (with IRS penalty abatement) and a business gone dry from severe IRS penalties.
Read more tips on how to prevent your business from getting into IRS payroll trouble.
More helpful articles:
Cracking Down on Businesses with Payroll Taxes Problems: New Economic Stimulus Plan Calls for Heightened IRS Enforcement
How A Business Owner Owed $7 Million in Payroll Tax Debt – But Enlisted Expert Tax Help and Paid Nothing to the IRS!
Small Business Beware – Expect Greater IRS Enforcement as the Agency Cracks Down on Income and Payroll Tax Problems
With IRS Audits on the Rise, Knowing How to Avoid or Resolve a Tax Audit Could Save You Money and Protect the Future of Your Business
Tax Resolution Services is a nationwide professional tax solution company with a team of tax attorneys and IRS specialists who can help you find tax relief. Free tax consultation – sign up on our website or call us at 866-IRS-PROBLEMS (866-477-7762).
Tags: delinquent payroll taxes, delinquent taxes, IRS audits, IRS debt, IRS enforcement, IRS help, irs payroll taxes, IRS problem solver, IRS tax problems, Michael Rozbruch, Payroll Tax Problems, tax attorney, tax evasion, tax help, tax lawyer, tax resolution, Tax Resolution Specialist
Posted in Expert Help From Tax Attorney, IRS help, Penalty Abatement, Tax Relief News, Tax Resolution Options and Alternatives, Tax news and tips, Taxpayer Rights | No Comments »
Monday, August 17th, 2009
If you are currently dealing with tax problems, now is a good time to get tax help before the new tax hikes kick in. The Obama Administration is continuing with its steadfast endeavor to collect back taxes as well as to collect more taxes from the wealthy and powerful.
Currently planned for 2011, Obama’s biggest tax hike will affect married filers making over $250,000 and singles making more than $200,000. In a nutshell, the administration is swapping out 36% and 39.6% tax rates for the current 33% and 35% tax brackets.
This will also affect small businesses and sole entrepreneurs. Since they are the largest contributors to the national tax gap, they are likely targets for revenue to help reduce the federal deficit.
Some of the tax hikes will come in the form of higher SECA taxes for owners of S firms and partnerships. And with new restrictions on worker classifications, businesses will no longer be able to treat employees as contractors to save money. Additionally, there will also be an elimination of certain tax breaks for big corporations.
The moral of the story is: get your taxes straightened out now before the new tax hike kicks in. Once you are liable for higher taxes, your penalties and interests will only increase with any subsequent unpaid taxes.
It’s important to keep in mind that ignoring the IRS is not solving the problem. If your tax problems are overwhelming you, you will be much wiser to seek a tax attorney’s help than to simply shelf the issue (it will only grow bigger). Many times, the help of a tax attorney will make the difference between crippling IRS penalties and manageable payment plans or even a reduction in penalties.
Find out more about how you can protect your financial future from IRS tax audits.
I solve tax problems every day. My team of tax attorneys and tax resolution specialists are here to help you! For a free, no-risk tax consultation, please call my office at 818 774-1813 or 866-IRS-PROBLEMS.
Tags: Back Taxes, delinquent tax returns, delinquent taxes, FALSE TAX RETURNS, IRS audit, IRS debt, IRS enforcement, IRS help, IRS Payment Plans, IRS problem solver, irs problems, IRS tax audit, IRS tax problems, Michael Rozbruch, tax attorney, tax audit, tax cheats, tax debt, tax lawyer, tax problem solver, tax settlement, Tax Tips
Posted in Penalty Abatement, Seeking Professional Tax Help, Tax news and tips, Taxpayer Advocate, tax help | No Comments »
Monday, August 17th, 2009
For small business owners, it can get tricky in gloomy economic times to keep up with making payroll tax deposits to the IRS. Oftentimes, the challenges could be simply about how to keep the lights on while still paying employees every month.
In recent months, the IRS has been pressured to close down on the $345 billion a year tax gap by going after the largest contributor of this tremendous sum of uncollected money: small businesses. With the IRS closing its grip on enforcing tax payments, it is crucial for small business owners to know what they can do to safeguard their business from serious IRS problems.
Here are a few small business payroll tax tips to stop delinquent payroll tax problems before they start:
* Plan ahead: Budget at least 10% of an employee’s annual salary for payroll taxes (Check with your accounting professional to make sure that number is high enough for your locale).
* Use a service to handle the payroll so you won’t be tempted to dip into the payroll tax fund.
* Use Electronic Federal Tax Payment System or EFTPS to automatically send payments. The computer won’t “forget” to send your payroll taxes.
* Look at your head count. Perhaps you can use independent contractors instead of employees. Check out the IRS web site for Independent Contractor (Self-Employed) or Employee test to see if this payroll tax slashing tip works for your small business.
* File your tax return on time, even if you don’t have the money to pay your tax bill. If you can’t afford to pay your taxes, you can still file your return on time and save 25% on the failure to file penalty right off the bat. What many people don’t understand is that filing an extension just puts off the inevitable, because it’s not an extension of time to pay, it’s just an extension of time to file. So what we tell our clients is that no matter how much is owed, if they enclose a check for $5 or $10 with the return and file it on time, it will reduce their filing penalties. Additionally, it creates a computerized record of account at IRS showing that you sent in a payment with your income tax return (reflecting good faith and credibility on your part).
If you do find yourself in trouble with the IRS, it is never too late to fight your case and abate your IRS penalties. A tax attorney can significantly maximize your chances of winning against the IRS.
Read more about IRS Payroll Penalties.
If you are a small business owner and are facing payroll tax problems, seek professional tax help now! Tax Resolution Services is a nationwide professional tax solution company with a team of tax attorneys and IRS specialists who can help you find tax relief. Free tax consultation – sign up on our website or call us at 866-IRS-PROBLEMS (866-477-7762).
Tags: Back Taxes, delinquent tax returns, delinquent taxes, IRS debt, IRS help, IRS payroll help, IRS payroll tax help, irs payroll taxes, irs problems, Payroll Tax Problems, tax attorney, tax help, tax lawyer, tax relief, tax resolution, tax resolution expert, tax resolution services, tax settlement, Tax Tips
Posted in Expert Help From Tax Attorney, IRS help, Penalty Abatement, Seeking Professional Tax Help, Tax news and tips, tax help | 2 Comments »
Tuesday, August 11th, 2009
Although there never was a “good” time to cheat on taxes, now is worse than ever for taxpayers and tax preparers to file fraudulent tax returns. With the IRS getting more funding and 800 more agents to collect taxes, taxpayers and CPAs who deliberately report fraudulent information on tax returns will be hit with severe IRS penalties.
If the IRS detects and proves beyond a reasonable doubt that fraudulence was deliberate, both the tax preparer and the taxpayer will be liable for IRS penalties.
CCH (http://tax.cchgroup.com) reports:
CPA Convicted of Willfully Aiding and Assisting in Preparation of Materially False Returns
A CPA was convicted of willfully aiding and assisting in the preparation of materially false income tax returns for the president and 100-percent owner of a mortgage brokerage firm and his wife. The government proved beyond a reasonable doubt that the CPA prepared the couple’s tax returns and willfully failed to report as taxable income business funds used by the couple for their personal purposes, even though he was aware that the owner received officer’s compensation from the firm, that the firm’s business funds were used to pay the couple’s personal expenditures and that funds withdrawn by the owner for his personal expenses constituted shareholder distributions that were taxable to the couple. Despite such knowledge, he willfully failed to include the amounts as income on the couple’s individual income tax returns. His contention that he believed the owner to have acquired a substantial basis in the corporation was rejected. He knew, or should have known, that the owner lacked basis in the corporation to take any shareholder distributions without declaring them as capital gains on his tax returns.
Protect yourself against fraud by double-checking your information on your tax returns before signing them off. Once your signature is on the return, it legally binds you to the information presented (whether they were fraudulent or not).
If you do find yourself in trouble with the IRS, you may get help from our specialized staff of tax attorneys, CPAs, EAs and tax professionals at TRS. Visit Tax Resolution Services for a free income tax relief consultation or call us at 866-IRS-PROBLEMS (1-866-477-7762).
Tags: Back Taxes, failing to file federal tax return, false tax return, FALSE TAX RETURNS, filing false tax return, Free Tax Consultation, IRS audits, tax attorney, tax cheat, tax cheats, tax debt, tax evasion, tax expert, tax fraud, tax lawyer, Tax Tips, unfiled tax returns
Posted in Tax news and tips | 1 Comment »
Friday, July 31st, 2009
As a part of recent IRS efforts to find wealthy Americans who have been deliberately evading taxes by using offshore bank accounts, a deal has been reached today with UBS. The US Government and Switzerland have come to an agreement today that will force the Swiss bank, UBS, to turn over 52,000 names of suspected tax evaders.
According to the New York Times (www.nytimes.com), “UBS and the Swiss government have been battling efforts by the Justice Department to force the bank to disclose the names of 52,000 American clients of UBS suspected of offshore tax evasion. The efforts threatened to peel back layers of Swiss banking secrecy, the backbone of the world’s private banking industry, and have rattled UBS, the world’s largest private bank and a pillar of the Swiss economy.”
A hearing scheduled for Monday in Miami was postponed until Aug. 10, at which point more details are expected to be released. The judge scheduled another conference call with parties in the case for next Friday.
Secretary of State Hillary Rodham Clinton is scheduled to meet with the Swiss foreign minister, Micheline Calmy-Rey, in Washington on Friday to discuss the matter. The issue has unsettled the Swiss banking industry and escalated into a diplomatic incident between the two sides.
Going after offshore bank account holders is one of the major ways that the IRS is trying to close its $345 billion annual tax gap. There are many implications in the latest UBS development. Many innocent offshore account holders who did not use the Swiss account to evade taxes may be heavily investigated. It is important for innocent offshore account holders to know their rights and seek a tax lawyer’s representation when necessary.
The tax evaders who are guilty will be facing severe IRS penalties and interests. Learn how you can save your financial future through penalty abatement.
Avoid getting in IRS trouble in the first place. If you have an offshore account, you must know the IRS rules that require you to disclose all of your income (domestic and international). Read the IRS rules for foreign bank and financial accounts reporting (FBAR).
Read the full article on the latest UBS settlement.
Don’t fight the IRS alone. If you find yourself in trouble with the IRS, you can contact our team of experts for a free consultation. Call us at 866-IRS-PROBLEMS (1-866-477-7762) or visit our website at www.TaxResolution.com
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Posted in Seeking Professional Tax Help, Tax news and tips | 3 Comments »
Thursday, July 23rd, 2009
Small business owners and sole proprietors have been identified as the largest group that is contributing to the increasing tax gap of $350 billion/year. It is extremely difficult for the IRS to investigate each small business owner to uncover tax evasion acts such as under-reporting income.
In the current economy, the astonishing yearly tax gap is alarming to policymakers who are desperately short of funds. They find that they cannot fulfill promises of helping to stimulate economic growth with public programs at the current tax revenue level. Public schools are suffering from the lack of money as well–leading ordinary Americans to suffer and burden the consequences of the tax gap.
Due to these pressing concerns, the IRS has been given more resources than before to heighten collection efforts in order to close the gap of $350 billion. Therefore, if you are tempted to partake in a tax evasion scheme, you need to prepare yourself for a more aggressive IRS crackdown that could result in your financial paralysis from severe IRS tax penalties.
You don’t have to be a tax lawyer to know the red flags that cause the IRS to suspect tax evasion. If you intentionally fail to report your business cash receipts, including checks that are cashed at the maker’s bank, the IRS has specific audit programs that will investigate this activity. Also, if the amount of income reported on your tax return far exceeds the previous year’s – you will be flagged as suspect! Additionally, if you are one of those “do-gooders” that helps others to file fraudulent tax returns and accept payment for this…that could be a problem.
Tax evasion encompasses any cheating of the government in taxes. Tax evasion is a felony and can carry up to a 5-year prison sentence and/or IRS penalties up to $100,000. Even in the current enforcement climate, taxpayers can learn how to save money by taking advantage of legal tax deductions to reduce their IRS bill.
Additionally, anyone who owes back taxes or is being audited by the IRS will need to know that there are options for negotiating a tax resolution. Working with a tax resolution specialist or tax lawyer can greatly increase your chances of successfully resolving your IRS tax problems. However, it’s important to be informed in the first place so you can avoid becoming a target of aggressive IRS collection efforts that can financially cripple you for life.
For more information on achieving a tax resolution for your IRS problems or back taxes, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.
Tags: Back Taxes, failing to file federal tax return, FALSE TAX RETURNS, filing false tax return, Free Tax Consultation, IRS debt, IRS enforcement, IRS problem solver, irs problems, Michael Rozbruch, tax evasion, tax lawyer, tax resolution, tax resolution services
Posted in Seeking Professional Tax Help, Tax Scams, Tax news and tips, tax help | No Comments »
Thursday, July 23rd, 2009
As part of recent efforts to collect unpaid taxes, the Senate Finance Committee has held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. Wilkins is expected to spearhead IRS efforts to close the $345 billion a year tax gap.
In this recession, the government feels more hard-pressed than ever to collect unpaid tax revenue in order to fund economically beneficial projects that will ultimately contribute to long-term economic stability.
CCH (http://tax.cchgroup.com) reports:
IRS Chief Counsel Nominee Tells Senate Finance Committee of Plans to Reduce the “Tax Gap”
The Senate Finance Committee (SFC) held a confirmation hearing on July 14 to consider the nomination of William Wilkins to be IRS Chief Counsel. “In this role … you will lead, with the help of more than 1,400 attorneys in that office. And, you will lead the IRS on critical issues. You will have influence over the resolution of tax issues that affect individuals, businesses, and tax-exempt organizations,” Committee Chairman Max Baucus, D-Mont., emphasized to Wilkins in opening remarks.
CCH Comment: The hearing also included consideration of the nomination of Dan Tangherlini to be Assistant Secretary of Treasury for Financial Management and Chief Financial Officer.
Former SFC Staffer
Wilkins is currently a partner with Wilmer Cutler Pickering Hale and Dorr (WilmerHale), Washington, D.C., where he has been a member of the firm since 1988. Prior to joining WilmerHale, Wilkins had been a member of the SFC staff since 1981, culminating in his serving as staff director and chief counsel from 1987 to 1988. Currently, Wilkins also serves as the chairman of the American Bar Association’s Section of Taxation.
Tax Gap
During the hearing, Baucus voiced his concerns about the tax gap –the difference between what taxpayers owe and what they pay –and asked Wilkins how he would address the tax gap. “Taxpayers have a right to expect the IRS to act tenaciously to shut down scams and schemes that undermine the health of our voluntary tax system. A $345-billion annual tax gap is simply not acceptable,” said Baucus. He also underscored the importance of narrowing the tax gap to pay for health care reform.
CCH Comment: Baucus has emphasized the role that the IRS Chief Counsel must play in dealing with the tax gap before. At the nomination hearing of former IRS Chief Counsel Donald Korb on March 8, 2004, Baucus pointedly asked Korb what he would do to lower the tax gap and restore faith in the tax system. Korb served as IRS Chief Counsel from April 14, 2004, until December 19, 2008.
Wilkins responded to Baucus’ questions on the tax gap in two parts. First, he stated that he “shared his concerns” about the tax gap and raising revenue for health care reform. Next, rather than focus on enforcement efforts, Wilkins directed his tax-gap response toward “taxpayer education.” According to Wilkins, a part of the tax gap “deals with educating those who want to comply” and making it more easy and efficient for them to do so. He underscored that “multiple tax programs addressing the same policy area offer a chance for simplification,” which can help educate taxpayers and contribute to closing the tax gap.
Baucus is expecting the next chief counsel to help close the tax gap and made this mission clear at the hearing. “It [the tax gap] is just wrong, and I look to you to help address it,” Baucus told Wilkins.
The committee is expected to approve the nominees for a full Senate vote soon.
IRS Chief Counsel
The IRS Chief Counsel’s office consists of approximately 2,300 employees, including about 1,600 attorneys. The office provides legal advice to the IRS Commissioner and IRS operating divisions.
By H. Goehausen, CCH News Staff
The IRS is working very hard to collect unpaid taxes in order to meet new collection goals. Judith Burns from Dow Jones Newswires reports that “The IRS estimates current taxes paid account for 83.7% of taxes owed, a level Baucus wants to see increase to 90% by 2017.” See full article.
Get regular IRS tax updates by reading our monthly newsletter.
Stay informed about your IRS tax rights. Follow me on Twitter @ taxresolution.
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Posted in Tax news and tips | 8 Comments »
Wednesday, July 22nd, 2009
In the current environment of increasing IRS enforcement efforts, it is unwise for taxpayers to evade taxes and think that they can get away with it.
While it may be true that a small percentage of tax evaders could enjoy a few years of “freedom” from the IRS, the ones who do get caught could be served with debilitating bank levies and heavy wage garnishments for life. (And you never know when the IRS will find you!)
The current yearly tax gap is at an astonishing figure of $345 billion and still growing at 10% every year. With the economy in shambles, the government is more pressured now than ever to close the tax gap in order to pay for projects that will ultimately help sustain a healthy economy.
There is a big difference between tax evasion and tax avoidance: while it is perfectly legal to work within existing law to avoid paying more than what is required by the IRS, cheating the government on taxes by evading tax laws is criminal and can carry up to a 5-year prison sentence and/or IRS penalties up to $100,000.
If you do find yourself under criminal charges by the IRS, you have the right to seek professional tax help from a tax lawyer. Oftentimes, help from a tax expert may make the difference between harsh penalties and substantial penalty discharges.
For the full press release on Costly Tax Evasion Schemes.
Make sure you know the difference between what is legal and what could get you in jail. Contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
Tags: Back Taxes, delinquent taxes, IRS debt, IRS enforcement, IRS problem solver, IRS tax audits, IRS tax problems, Michael Rozbruch, tax attorney, tax audit, tax cheat, tax cheats, tax evasion, tax expert, tax fraud, tax lawyer, tax resolution
Posted in IRS Question Corner, Seeking Professional Tax Help, Tax Debt Help News, Tax Liens and Levies, Tax news and tips, tax help | No Comments »
Wednesday, July 15th, 2009
The Obama Administration has given the IRS more financial and human resources to restrict tax evasion for the next couple of years–making it more difficult for tax cheats to escape unscathed. In an effort to bridge the enormous tax gap (most of which can be attributed to underreported income–$285 billion), the U.S. Treasury is working with the IRS to accomplish a number of stricter regulatory goals that would result in fewer tax cheaters, more voluntary compliance, and ultimately the reduction of the tax gap.
In this challenging economy, the U.S. government is experiencing a more pressing need to collect tax money in order to fund programs that would help stimulate economic rejuvenation.
On July 8th, the U.S. Treasury issued an updated report on managing the current tax gap issue (estimated at $345 billion a year).
CCH (http://tax.cchgroup.com/) reports:
Treasury Issues Updated Report on Efforts to Close Tax Gap
The Treasury Department on July 8 issued an updated report on its efforts to address the federal tax gap, estimated at $345 billion a year. The Treasury provided the report in response to a request by Senate Finance Committee Chairman Max Baucus, D-Mont.
The IRS collected $2.7 trillion in fiscal year (FY) 2008, representing 96 percent of government receipts. The tax gap represents the amount of legal tax receipts that are owed and not paid. The bulk of the tax gap –$285 billion –is attributed to underreported income. Another $33.3 billion results from uncollected taxes, while $27 billion stems from nonfilers. After IRS enforcement and collection of revenues of approximately $55 billion, the net tax gap stands at $290 billion, based on information from 2001 and earlier. The report notes that the Treasury and the IRS are making intensive efforts to update this information.
“With an ongoing economic recession, these billions of dollars in lost tax revenues could help relieve undue tax burdens … and contribute to long-term economic stability,” Baucus stated. “I am committed to developing legislation to make it easier for taxpayers to comply with their tax responsibilities and eliminate opportunities to underreport taxes or set up offshore tax schemes.”
The report estimates a voluntary compliance rate of nearly 84 percent, based on total tax liabilities of $2.11 trillion and voluntary tax payments of $1.77 billion. The IRS’s strategic plan for FY 2009-2013 sets a goal of 86 percent for 2009. Baucus pressed the Treasury in 2007 for a goal of 90-percent voluntary compliance by 2017.
Baucus commended the Treasury for a quick response to his May 2008 request for an updated plan. The report follows the Treasury’s September 2006 release of a Comprehensive Strategy for Reducing the Tax Gap and the IRS’s August 2007 report on Reducing the Federal Tax Gap: A Report on Improving Voluntary Compliance. The earlier reports promoted seven components of the plan to reduce the tax gap:
(1) Reduce opportunities for evasion;
(2) Make a multi-year commitment to research;
(3) Continue improvements in information technology;
(4) Improve compliance activities;
(5) Enhance taxpayer service;
(6) Reform and simplify the tax law; and
(7) Coordinate with partners and stakeholders.
The report summarizes the achievements, ongoing efforts and new initiatives for achieving progress in each area. The report notes that the administration’s FY 2010 budget proposes an expansive set of tools to reduce opportunities for evasion and other noncompliance.
Baucus commented that the report demonstrates that the IRS is working to identify problems, improve tax administration and set short-term compliance goals. He urged the IRS to devise more specific long-term goals, measures and timelines for improving tax compliance and recovering more revenue.
The report restates the IRS’s mantras that enforcement activities must be combined with a commitment to taxpayer service and that proposals must be sensitive to taxpayer rights and the imposition of burden on taxpayers. It pledges that the administration will work with Congress to strike the appropriate balance.
By Brant Goldwyn, CCH News Staff
Get regular IRS tax updates by reading our monthly newsletter.
Stay informed about your IRS tax rights. Follow me on Twitter @ taxresolution.
Tags: delinquent tax returns, delinquent taxes, failing to file federal tax return, IRS enforcement, IRS help, irs problems, IRS tax problems, Michael Rozbruch, stricter regulatory goals, tax expert, tax gap, tax relief, tax resolution, tax resolution expert, tax settlement, Tax Tips, Voluntary Disclosure
Posted in Tax news and tips, Voluntary Disclosure | 2 Comments »
Friday, June 19th, 2009
In an effort to curtail corporate financial irresponsibility, the Obama administration has been working fervently to control white-collar tax cheats. The media has successfully portrayed the businesses that have overseas bank accounts as “suspicious” and potentially guilty of tax evasion. In 2001, there was a $345 billion tax gap–most of which can be accounted for by the underground economy of tax evaders who have strategically utilized foreign tax havens and other methods to avoid giving away 1/3, 1/4, or 1/5 of their income to the U.S.† government. I spoke with Chuck Morse early this month on The Chuck Morse Show about the new tax enforcement regulations and how they can affect your financial well-being.
Click here to listen to the entire interview online.
President Obama has gathered momentous support for his expansion of the IRS; this year, 1,000 new IRS agents will be hired, followed by another 1,000 new tax agents in 2010. In 24 months, the IRS is scheduled to grow by 25% in size. This means the IRS will have even more resources at their disposal to come after your hard-earned money. This is the most crucial time to be aware of the new tax regulations in order to protect your assets domestically or internationally.
The New Tax Enforcement Climate
The main focus of these new tax regulations is to target the offshore bank accounts of American businesses; these accounts are relatively protected from the IRS if they are in a country that does not have a tax treaty with the US–such as Switzerland. Lately, IRS has been pressuring convicted tax cheats to give up names of other tax cheaters in exchange for leniency in penalty. This creates a ripple effect that not only incriminates other tax cheaters, but also potentially jeopardizes the innocence of the tax advisers to the tax cheaters–such as lawyers and accountants. All of the sudden, lawyers and accountants who gave legal advice to their clients may now find themselves under investigation by the IRS for suggesting overseas-tax shelters to their clients.
Once the IRS accuses you of a tax violation, you are considered “guilty till proven innocent.” Some taxpayers go to tax court, but only about 6% of cases that go through tax court are actually ruled in favor of the taxpayer. Most of the time, the government wins. Therefore, it is imperative for you to seek a tax attorney’s expertise to handle the tax problem before you contact the IRS yourself. One of the most common and most incriminating mistakes people make is to speak to the IRS themselves without consulting professional tax guidance first.
What the New Tax Regulation Climate Means to You
- Large sums of money deposits into your bank account will require you to formally alert the IRS
“Suspicious Activity Report“–this is the sister form to the “Currency Transaction Report” (which has been around for some time). The Currency Transaction Report is a form that the bank fills out any time you deposit $10,000 or more into your account. The Suspicious Activity Report is the form the bank fills out when you deposit less than $10,000 at regular intervals (i.e. if you go into your bank once a week for six weeks to put in $7,000 each time). The Suspicious Activity Report is investigated by the IRS more thoroughly than the Currency Transaction Report. All tax investigations are conducted by the IRS privately without public notice.
- Casual cash gifts can get you in trouble–and you have the burden to prove your innocence
If you receive large amounts of cash gifts (be it at a wedding or birthday, amounting to more than $10,000) and you go to deposit this amount into your bank, the IRS may accuse you of inaccurately disclosing your income. The IRS does not investigate the details of each cash source; therefore if you are in trouble with the IRS due to a personal circumstance unrelated to undisclosed income, you have to prove to them why you are innocent.
- If your business accepts credit card payments, you have to fill out a 1099 form
By the end of 2010, all credit cards and merchant processors are going to be required to issue the business establishment a 1099 for all the gross credit card receipts that they processed on the business’s behalf. This means restaurants or anyone who takes credit cards as a business are now going to get a 1099 and the IRS is going to compare that to the businesses’ tax returns. This is one area that’s going to go through the roof in terms of enforcement.
- If your business accepts PayPal, you may also need to fill out an IRS Office of Management and Budget Form
If you’re a business and you take more than one thousand dollars in one day of money orders, or you get a certified check of a thousand dollars or more in one day, you are considered a “currency operation”-in other words, they consider you just like a check-cashing establishment and you have to fill out an IRS Office of Management and Budget Form to alert the IRS that you’re one of these money service operations, even though you’re in a totally different business than cashing checks.
The Amnesty Period and Why You Need to Act Now
With the strict new tax enforcement laws, the U.S. government has offered an “Amnesty Period” which will expire on September 22, 2009. This amnesty period is a “break” for business owners with offshore accounts to voluntarily admit to tax evasion in order to reduce the amount they are fined. Before this period, the penalty is only 5-20% of the tax amount. However, after September 22, 2009, the penalty will be five to seven times the largest amount in your account over the last 6 years. Therefore, it is a really good idea to get your tax problems sorted out now before the September deadline.
Currently, the problem is that in this strenuous effort to enforce overseas tax cheats, a lot of people are going to get caught up in trouble who have not done anything wrong and who in the past, would have done the same thing without thinking twice about it, such as making a standard bank transaction. It is important to remain emotionally detached when dealing with the IRS, and it is an especially good idea to hire professional tax help–someone who knows the laws and are familiar with the IRS–to help defend you against unjust penalties.
I deal with tax problems every day and this year alone, my firm has successfully negotiated hundreds of IRS settlements at a rate of $0.13 on the dollar. For a free, no-risk consultation, please call my office at 866-IRS-PROBLEMS (1-866-477-7762) or visit the Tax Resolution Services web site.
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Friday, May 8th, 2009
Obama proposed nearly doubling funds to enforce tax compliance and has asked Congress for a $400 million boost for IRS enforcement activities in fiscal year 2010, to support its goal of cracking down on offshore tax dodgers.
The additional $400 million is an increase of about 8% that would bring the total IRS enforcement budget to around $5.5 billion for FY 2010. By doubling the tax law enforcement budget, the White House hopes to collect an additional $17 billion in taxes by 2010.
Obama has also announced a legislative proposal to hire 800 new IRS agents to enforce the tax code and focus on the offshore tax problem to help close the $345 billion tax gap.
The IRS also plans to triple the total amount it pays to informants who help catch tax cheats. Such payments totaled $22 million in 2008. The IRS expects to pay out $50 million to informants in 2009, and has budgeted another $75 million for 2010.
According to The Wall Street Journal:
Mr. Obama also proposed steeper levies on payments to federal contractors that owe back taxes to the IRS. The administration asked to increase from 15% to 100% the amount of federal payments to contractors that the IRS can levy.
The current limit of 15% is due to a technical error in a 2004 law, according to the White House budget proposal.
In addition, the administration would allow such levies to be imposed more quickly than under current law. The proposal would allow levies on contractor payments before all IRS administrative appeal processes have run their course.
The White House estimates that the two changes would allow IRS to collect roughly another $200 million a year in delinquent taxes.
The IRS is growing increasingly aggressive when pursuing tax cheats. If you can’t afford to pay your taxes or have unfiled tax returns, it’s more important than ever to know your options for income tax relief!
** If you have unfiled tax returns or other IRS problems, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
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Monday, May 4th, 2009
President Obama announced an overhaul of the tax code to “detect and pursue” U.S tax evaders and go after their offshore tax shelters.
The President’s two-part plan calls for nearly 800 new IRS agents to enforce the U.S. tax code – and help wage war against multi-national corps and their offshore tax havens.
Under the current tax code, companies with operations overseas pay U.S. taxes only if they bring the profits back to the United States. If they keep the profits offshore, they can defer paying taxes indefinitely.
Obama’s plan, which would take effect in 2011, would crack down on these loopholes and companies would no longer be able to write off domestic expenses for generating profits abroad. The goal is to reduce the incentive for U.S. companies to base all or part of their operations in other countries.
The president said that his plan would generate $210 billion in new taxes over 10 years and “make it easier” for companies to create jobs at home. Over a decade, $210 billion would make a modest dent in the forcasted $1.8 trillion federal deficit.
While the administration is not seeking to repeal all overseas tax benefits, Congress is expected to resist significant portions of Obama’s plan.
Meanwhile, the government will be looking to collect funds as the federal deficit continues to grow. Taxpayers can expect more aggressive collection tactics by the IRS to close in on the $400 billion tax gap that estimated each year,.
Individuals and businesses – both big and small – will see a noticeable increase in IRS enforcement. In the current economic downturn, we are seeing many struggling businesses falling behind on payroll tax deposits. And business owners need expert tax representation to protect the future of their companies and avoid IRS levies on their wages and bank accounts.
** If you are in trouble with the IRS, our specialized staff of tax attorneys, CPAs, EAs and tax professionals can help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
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Tuesday, April 28th, 2009
The IRS just released its strategic plan for fiscal years 2009-2013. The plan outlines how the agency will improve service to taxpayers and enforcement of the law over the next five years.
According to IRS Commissioner Douglas H. Shulman, the agency’s first goal is to make voluntary compliance easier in an effort to maintain the fairest and most effective system of voluntary compliance in the world.
In other words, their goal is to increase the enforcement of tax law and ensure that all Americans pay their full tax liability. This is no surprise. With the current economic slump, tax revenue is down and government spending is up, so it only makes sense that tax enforcement and collection efforts will be increasing.
According to the IRS, nearly 84 percent of all taxes are paid on time by taxpayers reporting freely and voluntarily.
This means that 16% of of the taxpaying public have tax problems. And in this recession, we can expect that percentage to increase significantly.
The report also looks at the nation’s sizeable the tax gap – estimated at a net of $290 billion a year, after IRS enforcement actions that bring in $55-60 billion.
The IRS declares that they owe it “to all the citizens who … pay their taxes to be vigorous in pursuing individuals who are not paying what they owe.” At the same time, the plan indicates that “the IRS cannot audit its way to full compliance” and that a multi-pronged approach is required.
Bottom line: If you can’t afford to pay your taxes or have unfiled tax returns, it’s more important than ever to know your options for tax relief! My best advice is to file your 2008 tax return as well as any prior delinquent tax returns as soon as possible to avoid the wrath of the IRS.
Download the full report here: IRS Strategic Plan, Fiscal Years 2009-2013
** If you owe back taxes and need income tax relief, our specialized staff of attorneys, CPAs, EAs and tax professionals can help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-IRS-PROBLEMS.
Tags: Back Taxes, delinquent tax returns, delinquent taxes, Douglas Shulman, income tax relief, IRS enforcement, IRS enforcement policies, irs problems, IRS Strategic Plan, Michael Rozbruch, tax attorney, tax audit, tax expert, tax gap, tax help, tax relief, tax resolution expert, tax resolution services, unfiled tax returns, unfiled taxes, voluntary complaince
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Thursday, April 23rd, 2009
When I was on the BigBiz Show with Russ and Sully ealier this month, we talked about what taxpayers should know about working with the IRS to solve their tax problems. We also talked about the tough economic times that we’re experiencing and how it’s not so much a Great Depression – but a Great Correction.
And as Sully pointed out, for many Americans, April 15th is not tax filing deadline, it’s tax extension filing deadline. Listen to the full interview or catch some of the highlights below.
The hot topic of the interview? With everybody forgiving debt to help stimulate the economy, is the IRS going to go easier on people with tax problems?
According to IRS Commissioner Doug Shulman, the IRS is going to offer more flexibility to distressed taxpayers.
But in reality, the IRS is only increasing their enforcement and collection efforts.
I read something yesterday that said the IRS, in what may be considered financial sensitivity training, is encouraging people who are struggling to pay taxes during the global economic crisis, reach out and talk to them. So whether you decide to take your IRS agent out to lunch, know that there are income tax relief options available.
For one thing, we’re able to negotiate IRS payment plans for over 7 years instead of 5. So it is helpful to some people and we’re able to get some levies released a lot quicker.
If there’s a levy filed on your bank accounts or your assets, it’s probably because you haven’t been communicating with the IRS and you’ve put yourself in an adversarial position. You’ve ignored them, you’ve ticked them off, you’ve ignored every single letter, and there’s 5 letters in a series for every year that you owe that you get, the last 2 come certified. So you’ve got to really ignore them for them to get ticked off and levy you.
If you ignore the IRS, they’ll come right to your front door. You don’t want to tick them off!
You don’t even need to look them up. No 800 number, no Google search…*knocks* IRS! “been expecting you!”
And you can definitely expect more aggressive tax collection tactics this year – given this extraordinary economy, there’s a lot of tax loss, which mean less revenue for the government.
For the year 2008, they’ll collect about $2.5 trillion and in 2007 they collected over $3 trillion. So they’re making up the difference by going after tax cheats, dead beats, tax cheaters.
The IRS collected about $56 billion in back taxes in 2008, which is about 14% higher than it was in 2006. And there’s still an approximated $345 billion tax gap.
Individuals with tax problems make up an entire microcosm of our society .
15% of the American tax paying public either has not filed or has a tax delinquency problem.
That is more than the foreclosure rate and the unemployment rate put together. And it affects everybody: rich, wealthy, poverty…everybody.
So if you are a late filer or need help resolving your tax debt, get expert help from the nation’s leading tax negotiation and mediation firm! Call us at 1-866-IRS-PROBLEMS for a free tax consultation.
Michael Rozrbruch Talks About Providing "Emergency Room" Services for Individuals and Small Businesses with IRS Tax Problems (click to view)
Tags: Back Taxes, bank levy, bigbiz show, income tax relief, IRS collection tactics, IRS enforcement policy, IRS Payment Plans, Michael Rozbruch, tax advice, tax cheats, tax debt, tax delinquents, tax expert, tax gap, tax help, tax problems, Tax Relief Consultation, tax resolution, tax resolution expert, tax resolution services, unfiled tax returns, Working with the IRS
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