This was a busy week in tax relief and IRS news. The stories that caught our attention ranged from how long to keep IRS tax records, to celebrity tax woes and finding tax debt solutions to the pro’s and cons of IRS prepared returns.
This week started with a helpful post titled: Tax Relief Tips for How Long to Keep IRS Records. A general rule of thumb guideline suggests that tax records be kept for three years. However, there are some exceptions where records must be kept longer or even indefinitely such as:
- Taxpayers who underreported more than 25% of their gross income
- Taxpayers who filed fraudulent returns or did not file at all
- Taxpayers with property deductions
- Businesses with Employees
Important note: Make sure your check with your tax professional before getting rid of important records. If your tax pro says it’s ok and your files are really, really old go ahead and shred.
Celebrity Tax Woes Abound – As I have said before, the IRS does not discriminate – it goes after millionaires, celebrities and average taxpayers equally if they believe them to be cheating or not paying taxes. Here are two celebrities who learned this first hand:
Singer Lauryn Hill Gets Three Months in Jail for Tax Evasion – Actress and award winning singer – Lauryn Hill was sentenced Monday to three months in prison plus three months home confinement for failing to file tax returns for five years and not reporting more than $2.3 million in income. Hill stated she had always meant to “eventually” pay her tax debt but was unable to during a period of time when she dropped out of the music business. Last year on her Tumblr account, Ms. Hill claimed that she went “underground” as a means of survival but did not “deliberately abandon” her responsibilities (meaning her IRS tax debt). Naturally, the IRS did not see it that way.
Actor Stephen Baldwin Guilty of Tax Charges – Stephen Baldwin pleaded guilty to failing to file his income taxes for three years and was ordered to pay $300,000 in back taxes to the government. Baldwin, the youngest of the Baldwin brothers, blamed his tax troubles on mistakes made by professionals he hired to manage his affairs while he was away shooting the reality TV show Survivor.
This week’s post titled: For Those with Tax Debt, Solutions Are Available was an appeal to those who haven’t addressed their tax troubles that it’s time to see a qualified tax professional to get to know your options. Sometimes people just need to know they are not the only ones facing IRS stress. To help them understand that cases like theirs are resolved every day, I highlighted the success story of a client named Bill.
Bill was reluctant, scared and overwhelmed by his IRS tax debt issues. As one of my newest clients, Bill was certainly one of my most nervous. He explained that his business had gone under as a result of the economic recession and due to some bad tax advice, he not only owed IRS back taxes, he was worried that not everything had been reported. The good news is that Bill is now on the road to tax recovery because of the strategies we employed, primarily our IRS negotiations that resulted in him entering into an Offer in Compromise agreement. This significantly reduced Bill’s IRS debt and gave him a fresh start.
IRS Prepared Tax Returns: Are They a Good Idea? I decided to compose a post based on being asked what my thoughts were about the IRS’ proposal to pre-prepare tax returns. Read the post for my entire commentary but my bottom line is this: this recent IRS press push appears to me to be a way for them to garner support for how the new system will decrease of audits. The idea of “fill in all the line items received from third party and self-accept the way it comes across” just does not sound like a viable solution. The proposed system also seems like a ploy to raise an inordinate amount of money to fill government coffers.
Have a great weekend!
More Tax Help, IRS News and Tax Relief Tips:
- IRS Bankruptcy-Five Tax Relief Options for Back Taxes
- Michael Rozbruch Interviewed in Opportunist Magazine
- Five Tips to Resolving Payroll Tax Problems
- IRS Offers Tax Help Tips-Worker Classification
- New Changes to Offer in Compromise – More Flexibility
Tags: Audits, Back Taxes, Celebrity Tax Woes, IRS back taxes, irs problems, IRS tax debt, Lauryn Hill, Offer in Compromise, Qualified Tax Professional, Stephen Baldwin, stephen baldwin tax problems, tax relief, Tax Resolution University