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Tuesday, April 21st, 2009
I recently appeared as the tax expert on Financial Lifeline Radio with hosts Dave Harbison and John March.We talked about all the tax buzz this year. It’s almost become a cultural movement in this bad economy with everyone struggling with tax debt - we’re seeing all the tax tea parties and stimulus packages making headlines.
Not to mention, it seems like you must have tax problems to be nominated by the Obama administration!
But seriously… If the government really wanted to stimulate the economy, they should have everyone who owed $50,000 or less not pay any taxes OR have the individual choose one year that they don’t pay taxes in the next 3 years. That would really stimulate the economy. Not these $600 or $1200 stimulus payments – that’s just going to go toward paying your credit card or other debt.
So far this fiscal year, tax revenue is down 14% and government spending is up 33%!
And I expect the Treasury will be down about $500 billion in collections this year. They usually collect about $3 trillion in tax revenue but will probably only receive about 2.5 trillion this year.
The government will have to make up the money by going after the tax gap – the non-filers, tax cheats, people who overstate deductions and understate income. And 85% of that $345 billion tax gap is due to self-employed individuals – the independent contractors who don’t get a 1099 the way large businesses do.
In this current climate, the IRS will be cracking down on small businessess with increased tax audits and aggressive collection tactics including bank levies. However, it’s just as important for individuals to know the consequences of not filing their taxes. April 15 may have come and gone, but it’s not too late to file your delinquent tax returns!
Listen to the full interview from Financial Lifeline Radio here.
** 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.
Tags: bank levies, dave harbison, delinquent tax returns, economic stimulus, failing to file federal tax return, financial lifeline radio, IRS help, john march, Michael Rozbruch, stimulus PAYMENT, tax attorney, tax audits, tax cheats, tax debt, tax expert, tax help, tax problems, tax resolution, tax resolution expert, tax resolution services, tax tea parties, unfiled tax returns
Posted in Tax news and tips | 1 Comment »
Tuesday, April 21st, 2009
Victims of dishonest tax return preparers can end up in a world of tax trouble – it’s no wonder return preparer fraud made this year’s IRS Dirty Dozen list of common scams taxpayers should avoid. The promise of large refunds may be all too tempting in this challenging economy – but taxpayers should still choose their tax preparer wisely.
With IRS enforcement on the rise, struggling taxpayers do not want to fall victim to tax scams – as they are certain to land in serious trouble with the IRS.
And tax preparers who take part in these tax schemes (claiming false deductions, submitting fraudulent returns, etc.) should beware. A sentence was recently imposed on an individual for aiding and assisting the preparation of fraudulent returns.
CCH (http://tax.cchgroup.com/) reports:
A sentence of incarceration and supervised release imposed on an individual following his conviction for aiding and assisting in the preparation of fraudulent income tax returns was proper. The individual committed substantial fraud over a span of several years by claiming false deductions for himself and obtaining income from a tax preparation business that submitted fraudulent returns on behalf of many other taxpayers. The trial court properly considered the sentencing guidelines, the individual’s medical and mental health requirements, the scale of the offenses and the length of time over which they took place, the interests of general and specific deterrence, the individual’s failure to take advantage of previous drug treatment opportunities, the need for just punishment and the option of imposing a probationary sentence as requested by the individual.
Tags: claiming false deductions, fraudulent returns, IRS dirty dozen, Michael Rozbruch, return preparer fraud, tax cheats, tax expert, tax resolution expert, Tax Scams, tax schemes
Posted in Tax news and tips | 2 Comments »
Tuesday, April 14th, 2009
According to the IRS annual Dirty Dozen list of most common tax schemes, phishing “expeditions” are on the rise this year along with frivolous tax arguments. I even got a phishy email the other day. These scam email look real too.. on IRS simulated letterhead complete with the logo and all.
It’s no surprise that these tax scams are being peddled to Americans in full force - as IRS enforcement is on the rise and struggling taxpayers may be desperate for any way out of paying their taxes in this down economy.
But fall victim to one of these scams, and you are certain to find yourself in serious trouble with the IRS.
“Taxpayers should be wary of scams and promises to avoid paying taxes that seem too good to be true,” Acting IRS Commissioner Linda Stiff said. “There is no secret formula that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”
With the tax deadline looming, this annual list from the IRS is an important reminder that it’s real easy to get in tax trouble. But it’s also possible to resolve your tax problems, if you help from certified tax resolution experts.
Here are the common tax scams taxpayers need to avoid:
1. Phishing
Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims’ financial accounts. These criminals use the information obtained to empty the victims’ bank accounts, run up credit card charges and apply for loans or credit in the victims’ names. Phishing scams often take the form of an e-mail that appears to come from a legitimate source. Some scam e-mails falsely claim to come from the IRS. To date, taxpayers have forwarded more than 33,000 of these scam e-mails, reflecting more than 1,500 different schemes, to the IRS. The IRS never uses e-mail to contact taxpayers about their tax issues. Taxpayers who receive unsolicited e-mail that claims to be from the IRS can forward the message to a special electronic mailbox, phishing@irs.gov, using instructions contained in an article titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes.” Remember: the only official IRS Web site is located at www.irs.gov.
2. Scams Related to the Economic Stimulus Payment
Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a “rebate.” To obtain the payment, eligible individuals in most cases will not have to do anything more than file a 2007 federal tax return. But some criminals posing as IRS representatives are trying to trick taxpayers into revealing their personal financial information by falsely telling them they must provide information to get a payment. For instance, a potential victim is told by phone or e-mail that he or she is eligible for a rebate but must provide a bank account number (or similar information) to get the payment. If the target is unwilling, the victim is then told that he cannot receive the rebate unless the information is provided. Individuals should remember that the only way to get a stimulus payment is to file a 2007 tax return. The IRS urges taxpayers to be extra-vigilant. The IRS will not contact taxpayers by phone or e-mail about their stimulus payment.
3. Frivolous Arguments
Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. Most recently, the IRS expanded its list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of these positions on the list are subject to a $5,000 penalty. The most recent update of the list of frivolous positions includes: misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending, erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States, a nonexistent “Mariner’s Tax Deduction” related to invalid deductions for meals and the misuse of the fuel tax credit (see below). The complete list of frivolous arguments is on the IRS Web site at IRS.gov.
4. Fuel Tax Credit Scams
The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit was recently added to the list of frivolous tax claims, potentially subjecting those who improperly claim the credit to a $5,000 penalty.
5. Hiding Income Offshore
Individuals continue to try to avoid paying U.S.taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions.
6. Abusive Retirement Plans
The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to Roth IRAs. Taxpayers should be wary of advisers who encourage them to shift appreciated assets into Roth IRAs or companies owned by their Roth IRAs at less than fair market value. In one variation of the scheme, a promoter has the taxpayer move a highly appreciated asset into a Roth IRA at cost value, which is below annual contribution limits even though the fair market value far exceeds the amount allowed.
7. Zero Wages
Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer also may submit a statement rebutting wages and taxes reported by a payer to the IRS. Sometimes fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme.
8. False Claims for Refund and Requests for Abatement
This scam involves a request for abatement of previously assessed tax using Form 843, “Claim for Refund and Request for Abatement.” Many individuals who try this have not previously filed tax returns. The tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses Form 843 to list reasons for the request. Often, one of the reasons given is “Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service.”
9. Return Preparer Fraud
Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true.
10. Disguised Corporate Ownership
Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity. Once formed, these anonymous entities can be used to facilitate underreporting of income, non-filing of tax returns, engaging in listed transactions, money laundering, financial crimes and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance.
11. Misuse of Trusts
For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.
12. Abuse of Charitable Organizations and Deductions
The IRS continues to observe the misuse of tax-exempt organizations. Misuse includes arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets or income from donated property and overvaluation of contributed property. In addition, IRS examiners are seeing an upturn in instances where taxpayers try to disguise private tuition payments as contributions to charitable or religious organizations.
** If you are in trouble with the IRS and need tax help, 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: dirty dozen, economic stimuls payment, frivolous argument, frivolous tax argument, fuel tax credit, hiding offshore income, IRS enforcement, IRS help, IRS problem solver, irs problems, IRS tax problems, Michael Rozbruch, phishing, tax attorney, tax expert, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, Tax Scams, zero wages
Posted in Tax news and tips | 3 Comments »
Friday, April 10th, 2009
The Los Angeles Times released a list of California taxpayers with the largest delinquent income tax bills who together owe $143 million in back taxes.
While O.J. Simpson and his $1.5 million bill have been taken off the list (after being sentence to 9 years in prison), Dionne Warwick (who owes $2.18 million) and Burt Reynolds (who owes $225,000) are among the notable names on the list of 250 people with the largest delinquent income tax bills. Actor-comedian Sinbad owes $2.5 million on a tax lien first filed in 2001.
It’s not surprising that high profile people have delinquent income tax bills – 1 in 6 (or about 16%) of the taxpaying public have tax problems. And in this down economy, I expect that rate to increase significantly.
The annual list is intended to pressure those with large bills to pay up. However, it only represents only a fraction of the $6.5 billion in personal income taxes that go unpaid each year in California alone. An estimated 21% of federal individual income taxes go unpaid each year — contributing to a $400 billion tax gap yearly.
** 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, burt reynolds, california income tax relief, california tax help, california tax resolution, delinquent tax returns, delinquent taxes, Dionne Warwick, income tax relief, IRS back taxes, IRS enforcement, IRS problem solver, irs problems, IRS tax problems, Michael Rozbruch, O.J. Simpson, Sinbad, tax expert, tax lien, tax problems, tax resolution expert, tax resolution services, unfiled tax returns
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Saturday, April 4th, 2009
In attempts to close the tax gap, the IRS is increasing tax compliance and aggressively taking action against tax cheats and tax promoters. As the tax gap grows, more Americans than ever will be facing audits and the IRS will be re-asserting it’s position on individuals who maintain frivolous arguments for not paying their taxes.
CCH (http://tax.cchgroup.com/) reports:
Sanctions were properly imposed on an individual who advanced a frivolous argument that he was not liable for the penalties imposed on him for failing to file income tax returns. The individual’s argument that Form 1040 lacks a valid Office of Management and Budget control number and is not compliant with the 1995 Paperwork Reduction Act (PRA) has been repeatedly rejected as frivolous by the Tax Court and various federal appellate courts. Moreover, the individual was on notice that his position was frivolous but he continued to maintain it. Furthermore, despite previous sanctions, the individual ignored the Tax Court’s warnings and continued to maintain his frivolous position on appeal. Therefore, sanctions were imposed for maintaining a frivolous appeal.
**If you owe back taxes or 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 866-477-7762.
Tags: Back Taxes, frivolous appeal, frivolous argumemt, IRS audits, IRS debt, IRS enforcement, IRS help, IRS problem solver, irs problems, IRS tax problems, Michael Rozbruch, tax attorney, tax audit, tax audits, tax cheat, tax cheats, tax compliance, tax evasion, tax expert, tax gap, tax help, tax promoters, tax protester, tax relief, tax resolution, tax resolution expert, tax resolution services
Posted in Tax news and tips | 1 Comment »
Friday, April 3rd, 2009
The Senate is expected to approve a 2010 budget that includes $825 billion in tax relief over the next five years.
The budget resolution offers tax help targeted largely to the middle class and would extend the 2001 and 2003 middle-class tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 over the five-year span of the budget outline.
CCH (http://tax.cchgroup.com/) reports:
The provisions address alternative minimum tax (AMT) relief, estate tax reform, business tax relief and extenders. The budget also assumes the enactment of loophole-closers and enforcement efforts to help close the tax gap, which are estimated to raise $133 billion in additional revenue.
The budget debate dragged on through the night as lawmakers slogged through approximately 100 amendments, some with minor tax implications. An amendment by Sen. Robert F. Bennett, R-Utah, which would prohibit changing current tax law for charitable contribution tax deductions to pay for modernizing the health care system was agreed to by unanimous consent.
The Senate budget resolution includes two deficit-neutral reserve funds for tax relief and tax reform. The provisions call for a reserve fund to promote economic stabilization and growth. The first would accommodate any tax relief, including the extension of expiring provisions and refundable tax credits, some of which were first provided in the economic recovery package, as long as the cost of the tax relief is offset. The second reserve fund would provide for comprehensive tax reform that would ensure a sustainable revenue base for a tax system that promotes simplicity, fairness, and competitiveness.
Deficit-neutral reserve funds’ tax-related amendments approved would: (1) provide for the extension of the top individual tax rates for small businesses after 2010, (2) permanently extend the deduction for state and local taxes, (3) provide a point of order against legislation that has the effect of imposing a greater tax liability on taxpayers who are married than if such taxpayers had filed individual tax returns, and (4) provide for the repeal of the 1993 increase in the income tax on Social Security benefits.
Republican members on April 1 also chipped away at the Democratic-controlled budget process with anti-tax-related amendments that held little clout. Senate Budget Committee Chairman Kent Conrad, D-N.D., put Republicans on notice that their proposals, although approved, would not survive a conference to reconcile the Senate and House versions of the budget. Those include an amendment by Finance Committee member John Ensign, R-Nev., that would create a 60-vote point of order against legislation that would raise taxes on individuals with adjusted gross income (AGI) of less than $200,000 and couples with AGI of less than $250,000. The other, an amendment offered by Finance Committee member John Cornyn, R-Tex., would create a 60-vote point of order against legislation that would raise taxes on small businesses.
In addition, the Senate adopted by voice vote an amendment by Sen. Johnny Isakson, R-Ga., that would create a deficit-neutral reserve fund for future legislation providing a nonrefundable federal income tax credit for the purchase of a primary residence in the amount of $15,000 or 10 percent of the purchase price.
The Senate budget resolution does not include any reconciliation instructions; however, the House budget resolution (HConRes 85) contains an explicit placeholder for reconciliation instructions (TAXDAY, 2009/04/03, C.1). Because the instructions are in the House resolution, they can be added in conference between the House and the Senate, allowing the Senate to pass climate-change or health-care legislation with only a simple majority.
Specific tax provisions in SConRes 13 call for continuation of the 2009 estate tax parameters, with an exemption of $3.5 million, or $7 million for a couple, indexed for inflation and a top rate of 45 percent. Small businesses gain a permanent extension of the Code Sec. 179 expensing provision, including a new proposal to eliminate capital gains taxes for small businesses, going beyond the current 75-percent exclusion. The budget also calls for expanding the net operating loss carryback rules.
For individuals, the budget plan assumes AMT relief through 2012, without offsets. It would also make permanent the 10-percent bracket, the child tax credit, and marriage penalty relief. In addition, it would extend other 2001 and 2003 tax changes for couples with income under $250,000 and singles with income under $200,000, including the 25-percent and 28-percent brackets and the preferential rates for capital gains and dividend income. Similarly, it would extend through 2011 those tax provisions that are slated to expire in 2009 or 2010, but that have been routinely extended in the past. These provisions, or “extenders,” include, among others, the research and experimentation tax credit, the deduction for state and local sales taxes, the deduction for teacher classroom expenses, and the exception for active financing income.
Follow me on Twitter @taxresolution.
Tags: alternative minimum tax, Michael Rozbruch, Tax Cuts, tax expert, tax help, tax problems, tax relief, tax relief reconciliation act, tax resolution, tax resolution expert, tax resolution services, Tax Tips
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Wednesday, April 1st, 2009
I recently blogged about the federal budget forecast for a $1.8 trillion deficit. There is close to a $400 billion tax gap each year. This means that taxpayers paid $400 billion less than they should have. Collecting these funds through more aggressive collection tactics by the IRS will be politically more appealing than raising taxes – so taxpayers beware!
Closing the tax gap will require greater IRS enforcement for individuals as well as businesses – both big and small. The current economic downturn may encourage struggling businesses to cheat on their taxes – resulting in an even larger tax gap than prior years.
Meanwhile, it was recently reported that 13 companies who received TARP funds owed millions of dollars in back taxes. While the IRS has the means to collect that money, it is unclear whether the Internal Revenue Service has taken any steps to recover unpaid tax money from the TARP recipients.
This can have the appearance of a double standard on who has to pay taxes and who does not. If you’re “too big to fail” you get a pass… for now. But, if you’re not on the “too big to fail” list watch out!
We are seeing a noticeable increase in small corps , LLCs and sole proprietors getting behind on payroll tax deposits as a result of the downturn in the economy. And the IRS is not turning a blind eye. The small business owner is at a big disadvantage if they try to go it alone. They need expert representation or they risk the IRS ‘managing their cashflow via levies.’
** If you are in trouble with the IRS, 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, federal deficit, IRS enforcement, IRS levies, Michael Rozbruch, Payroll Tax Problems, small business, small business tax help, small business tax problems, small business taxes, tax expert, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, Tax Tips
Posted in Tax news and tips | 3 Comments »
Tuesday, March 31st, 2009
Bloomberg News columnist John M. Berry makes some interesting points regarding President Obama’s new task force created to close the tax gap by focusing on closing loopholes, streamlining tax code and generating revenue.
“It may not accomplish much,” he says.
Highlights from the article include:
With April 15 fast approaching, stronger enforcement and a lot more resources for the Internal Revenue Service should head the administration’s to-do list.
The tax code could be undoubtedly improved, but the biggest problem is in terms of the tax gap, is a lack of adequate enforcement (making it harder for taxpayers to cheat and easier to catch those who do) and the Obama-ordered code review won’t much help that.
Recommendations for bolstering IRS complaince are due in early December, and eight months isn’t nearly enough time to lay the groundwork for big changes.
SMALL TIME TAX CHEATS
Research shows that the tax gap is the result of “low rollers” (proprietors of small businesses and farmers) who underreport income and the fail to pay employment taxes related to that income – not just high-rollers hiding income in offshore accounts.
NEED FOR GREATER ENFORCEMENT
A study of tax returns for 2001 found a gross tax gap of $345 billion, or 16 percent of taxes due. Enforcement activity plus other late payments recovered $55 billion of that, leaving a gap of $290 billion.
The dire state of the economy may also encourage more taxpayers to cheat. You can be sure the gap resulting from the 2008 tax returns is going to be noticeably bigger than it was in 2001.
**If you are can’t afford to pay your taxes this year, find out what you can do to avoid IRS penalties and other costly financial consequences.
Tags: delinquent tax returns, employment taxes, IRS compliance, IRS enforcement, irs problems, Michael Rozbruch, small business taxes, tax cheats, tax evasion, tax expert, tax gap, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, unfiled tax returns
Posted in Tax news and tips | 1 Comment »
Monday, March 30th, 2009
According to a recent article in the Wall Street Journal, a push by the IRS to be more aggressive with wealthy taxpayers means that it’s critical to know the common tax audit red flags.
The IRS has been strongly disputing a report this week from the Transactional Records Access Clearinghouse that says audits of the wealthy Americans have significantly dropped off.
Taxpayers who make more than $10 million a year or more have nearly a 10% chance of being audited
According to Agency spokesman Terry Lemons , “if you’re a millionaire, you’re a lot more likely to hear from the IRS than taxpayers in any other income bracket.”
While no one can say for sure which tax return will trigger an IRS audit, wealthier Americans under greater scrutiny from the IRS should be aware of common adudit red flags.
With the White House looking to bolster IRS enforcement, one of the best things you can do to reduce your chances of an IRS audit, is to file and accurate tax return.
The number ONE red flag in triggering a tax audit is claiming false business expenses.
Monies from your expenses’ payments must be used for legitimate business-related activities. However, many people end up in tax trouble when they used these monies for personal purposes and falsely characterize them as legitimate business expenses. This can be seen as a failure to report additional income on your tax return.
And keep in mind the following things that could invite IRS scrutiny:
- Numerous gifts to charity
- Reported income that doesn’t match numbers shown by employers and brokers on 1099 and W2 forms are items that invite scrutiny
- Schedule C, for small business owners
- Big write-offs for hobbies like owning horses or Picassos
** If you are in trouble with the IRS and need tax help, contact our specialized staff of 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: audit red flags, audit triggers, IRS audit, IRS enforcement, IRS problem solver, IRS tax problems, Michael Rozbruch, tax attorney, tax audit, tax audits, tax expert, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, wealthy taxpayers
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Wednesday, March 25th, 2009
I’ve blogged before about how closing the tax gap could help fund deficit reduction activities. And the White House is definitely searching for new tax revenues. Plans are underway to create a task force that will be looking to end corporate loopholes and bolster IRS enforcement.
The Wall Street Journal reports:
Mr. Obama’s budget proposal began the process of addressing problems such as the tax gap, the difference between taxes owed and taxes collected. “The question is whether we can be even more aggressive” in those areas, Mr. Orszag said in an interview late Tuesday. The task force will be run through a White House advisory board being headed by former Federal Reserve Chairman Paul Volcker, Mr. Orszag said.
No target for a dollar figure has been set. But the effort theoretically could lead to tens of billions of dollars in additional collections. The tax gap alone is estimated at $300 billion a year, of which more than $100 billion is believed to be collectible, according to IRS statistics.
In 2007, one out of 11 individuals with incomes of $1 million or more faced a tax audit. Tougher enforcement against tax avoidance means that the IRS will be even more aggressive when pursuing tax cheats and businesses avoiding their obligations – and more Americans than ever will be seeking tax relief and IRS help.
Follow me on Twitter @taxresolution
Tags: delinquent tax returns, IRS compliance, IRS enforcement, IRS help, IRS problem solver, IRS tax problems, Michael Rozbruch, tax cheats, tax expert, tax gap, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services
Posted in Tax news and tips | 2 Comments »
Tuesday, March 10th, 2009
CCH (cch.taxgroup.com) reports:
President Obama on March 6 signed HJRes 38 (P.L. 111-6), a continuing resolution that provides fiscal year (FY) 2009 appropriations through March 11, 2009, for federal government operations at several departments and agencies, including the Treasury Department and the IRS. The stopgap funding measure was necessary to allow additional time for Congress to complete action on a $410-billion FY 2009 appropriations package.
The omnibus package appropriates $12.7 billion for the Treasury Department, including $11.5 billion for the IRS, an increase of $428 million over the IRS’s FY 2008 budget. The IRS budget is $161 million more than the Bush administration request for FY 2009. Final action on the massive omnibus appropriations package met a major roadblock over funding for approximately 8,000 projects, or earmarks, inserted in the bill by members of Congress. The White House has rebuffed congressional calls for the president to veto the legislation, although critics contend that it contains $8 billion in pork-barrel spending.
Separately, White House Press Secretary Robert Gibbs on March 9 sidestepped questions on whether deteriorating economic conditions warranted a second stimulus package. Gibbs, at a press briefing, indicated that the focus right now is to implement the provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5).
By Paula Cruickshank, CCH News Staff
House Joint Resolution Making Further Continuing Appropriations for Fiscal Year 2009, HJRes 38, P.L. 111-6
Tags: IRS budget, IRS help, irs problems, Michael Rozbruch, tax help, tax problems, tax relief, tax resolution
Posted in Tax news and tips | No Comments »
Friday, February 27th, 2009
I recently blogged about the new economic stimulus package and how it affects your IRS bill. In addition to funding deficit-reduction activities, the federal government is looking at ways to close the tax gap by taking a closer look at employment tax returns.
According to the most recent estimates, payroll tax mistakes cost the IRS $15 billion – and tax experts agree that today’s figure is much greater! For several years now, the agency has been pushing to increase tax compliance by taking aggressive action against tax cheats and tax promoters.
The IRS is in the early stages of implementing random exams of employment tax returns (the plan is to start in 2010). They hope to figure out how much payroll tax mistakes such as misclassification of workers and other employment tax errors actually contribute to the tax gap.
Because of the growing tax gap, more and more Americans are facing audits – as well as intrusive, and sometimes illegal, collection tactics by the IRS. Small business owners also need to know how to avoid common payroll tax problems, and how to avoid and resolve tax audits to protect the future of their businesses.
Generally, owing payroll taxes is the “kiss of death” for many small business owners, and many lose their businesses. Your payroll tax debt and penalties can add up quickly! And it’s important to note that the IRS is the only creditor on the planet that can pierce the corporate veil and go after the owners/shareholders/members individually. They do this by assessing what’s commonly referred to as the Trust Fund Recovery Penalty (TFRP).
If you are a small business that needs tax help, you need to hire specialized tax resolution experts to fight the IRS on your behalf.
If you have payroll tax problems or need IRS help, our specialized staff of tax attorneys, CPAs, and EAscan help. Visit the Tax Resolution Services web site for a free tax relief consultation or call us at 866-477-7762.
Tags: Back Taxes, economic stimulus, employment tax returns, employment taxes, IRS audits, IRS debt, IRS enforcement, IRS help, IRS problem solver, IRS tax problems, Michael Rozbruch, payroll tax business, Payroll Tax Problems, Payroll Taxes, tax audits, tax compliance, tax expert, tax gap, tax help, tax relief, tax resolution, tax resolution expert, tax resolution services, trust fund recovery penalty
Posted in Tax news and tips | 5 Comments »
Thursday, February 5th, 2009
It is a known fact that 1 in 6 (or about 16%) of the taxpaying public have tax problems. Given the current state of the economy, I expect that rate to increase significantly. It’s not surprising that high profile people have tax problems too. As a matter of fact, it is not uncommon for high income earners to have issues with the IRS.
Unfortunately, the Obama Administration may be sending the wrong message to the American taxpaying public by apparently condoning the behavior of Tim Geitner and Tom Daschle. Although Daschle withdrew his name as a nominee for the Health and Human Services Secretary is still leaves a bad taste in people’s mouths. And I am positive that if he weren’t named as a nominee he would still owe the IRS $120,000 + today.
However, these recent tax scandals involving Obama administrative appointees may end up leading the way to tougher tax compliance. It is likely as the new head of Treasury, Geitner will be pressured to send meaningful signals through strong IRS compliance initiatives- since the ‘other side of the aisle’ will be looking for an opportunity to attack a key lieutenancy of the Obama administration for past ’sins.’
Politics aside, strong tax compliance is one of the very few ways the Administration has to offset a rapidly ballooning federal deficit- the current annual tax gap…what should have been paid v. what was collected…is approaching $400 billion or half the TARP.
As a recent article in the Washington Post points out, the current tax system is complicated but the tax code can hardly be blamed for the recent problems of Obama administration appointees who came up short in what they owed the government.
TaxProf adds: “These are not rocket-science kinds of tax issues. I take them at their word, but on the other hand, these were not cases of something really esoteric.”
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 866-477-7762.
Tags: daschle, geitner, IRS compliance, IRS enforcement, Michael Rozbruch, tax expert, tax problems, tax resolution expert, tax resolution services, tax scandal
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Thursday, January 8th, 2009
In her recent report to Congress, National Taxpayer Advocate Nina Olson urged the Internal Revenue Service to take steps to ease the tax burden on Americans hit by the recession and consider the economic circumstances of a taxpayer before initiating “enforcement actions.”
As I’ve said before, the IRS will continue to aggressively pursue tax collection compliance, despite the prevailing harsh economy. The IRS is under increasing pressure to track down the non-filers, tax cheats and the people who owe back taxes to increase revenue and close the growing tax gap. And it’s only going to get worse.
Nevertheless, the IRS recently released a fact-sheet offering what they are calling help for distressed taxpayers. In that announcement, the agency said it would consider postponing collection actions for those with financial hardships and add flexibility for missed payments, among other things.
This “kinder, gentler IRS” spin may work to gain a little positive PR, but it is not going to provide significant help for Americans who need tax relief. Trust me, the IRS is not in the business of writing off taxes or just simply handing out big refund checks. They have always been and continue to be the most brutal collection agency on the planet and those of us familiar with their uncompromising collection tactics know that it is very unlikely that they will start showing mercy now!
If you are in trouble with the IRS, 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 866-477-7762.
Tags: Back Taxes, internal revenue services, IRS enforcement, irs problems, Michael Rozbruch, Nina Olson, tax attorney, tax burden, tax expert, tax gap, tax help, tax relief, Tax Tips, Taxpayer Advocate
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Monday, October 27th, 2008
I’ve been talking a lot lately about closing the $345 billion tax gap to help us cope with the proposed $700 billion government bailout and growing federal defecit. Today the Associated Press reported that several states are putting more money and personnel into cracking down on tax cheats - large and small – to cut into their growing budget deficits.
Tax collectors are likely to focus their stepped-up enforcement on small businesses, who tend to be the biggest tax evaders, particularly during economic downturns. Warning letters have already gone out to small businesses warning them of the consequences of not collecting or remitting state taxes.
Additional highlight from the article:
California, faced with a $15.2 billion budget deficit, hopes to collect an additional $1.5 billion by doubling the penalties on corporations that are late in paying taxes.
California’s tax collection agencies are getting an additional $226 million to hire more auditors and tax collectors and pay for new enforcement initiatives, including using driver’s license records to find people who should be filing tax returns but aren’t.
In Massachusetts, which is facing a $1.3 billion deficit, officials expect to take in an additional $150 million from new tax-enforcement initiatives, including $60 million as a result of the work of nearly 90 new state workers focusing on compliance and collection.
Massachusetts tax collectors expect to squeeze $30 million more out of some businesses by cracking down on those that improperly classify workers as independent contractors instead of full-time employees to avoid taxes.
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