Insurance World

Every taxpayer faces Tax Problems at one point of his life or another. Some Tax Problems are just graver than others. For example, someone who's just having a hard time trying to file his mixed income tax obligations is definitely in a better boat that someone, let's say, who's already being hounded by the IRS because of delayed payments. There are even some people whose salaries have already been garnished by the IRS, making them get almost next to nothing of their income because the funds are being used to pay off their tax debts.

What do you do when you're faced with these Tax Problems? It doesn't really matter if you have a mild problem with your taxes, or a grave one that's pushing you to the poorhouse. Either way, you'll probably be sleepless because of it. The only solution right now is to settle the matter as calmly as possible and "calm" isn't an operative word to use when you're representing yourself throughout the whole proceedings. It's always better to seek the help of a tax attorney you can trust.

Hiring tax lawyers pre-IRS audit

Ideally, you shouldn't wait for an IRS audit before hiring a tax lawyer. You should prevent a tax audit from happening by hiring a professional legal counselor to fix your tax paperwork for you. For example, you might have rounded off your income thinking that it's totally alright to do so. A tax lawyer can call your attention to this because they know that this raises the red flag for IRS officials.

They want exact amounts, to the last cent and they won't settle for your estimated zeroes. While the difference might not even amount to a few dollars every month, this would still look like an attempt to evade your tax obligations. At least, with a legal counselor, this kind of shallow but stressful tax problem can be prevented. Tax lawyers are also updated about the most recent changes in tax laws.

You'll appreciate your decision to hire a professional to do your taxes when your colleagues, who were too frugal to hire a lawyer, suffer from Tax Problems because they've chosen to figure out their taxes. They might have saved themselves from lawyers' fees, but look at the damage an IRS audit leaves in its wake. You certainly wouldn't want that.

Hiring a tax lawyer during an audit

A lot of people have attempted to represent themselves during a tax audit or Tax Problems of the same caliber, and they have lived to regret it. Audits and collections can be very harassing, and the IRS is the harshest kind of collector. They can invade your privacy simply because you owe "the people" money and they would feel like they have the right to garnish your salary.

If these things are already happening to you, it's time to hire a tax lawyer. Your tax lawyer can make sure that the IRS doesn't cross your rights to privacy. They can be pretty harsh when it comes to tax collection, although they do mean well. They just want the community to benefit from the taxes you should have paid a long time ago. However, the settlement of your tax debts and penalties should be coursed through the right channels.

With the help of a tax lawyer, you can make sure that your rights are protected, as well as ask for a lighter penalty for your tax payment delay. Your tax lawyer would have to look for a loophole in the system to make sure that you pay for less than the original penalty. Usually, this is done by pleading bankruptcy, declaring a serious family catastrophe (or death of a loved one), or simple ignorance of the law.

Seomul Evans is a Internet Marketing Services Consultant specializing in Attorney Marketing. Visit the sites to learn more about Dallas IRS Help and Income Tax Attorney.

View the original article here

An Offer in Compromise is an agreement between the taxpayer and the government that settles a tax liability for payment of less than the full amount owed. The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government. The program is not designed to simply allow taxpayers to get out of paying their tax obligations. In fact it is quiet the opposite...it is designed to allow the government to collect something when it is unlikely that the tax liability can be collected in full. The requirements are largely financial in nature and are more strict than most would think after hearing advertisements flood the marketplace that make it sound easy to settle with the IRS for "pennies on the dollar". While some cases may very well settle for pennies on the dollar a taxpayer's situation has to meet certain criteria for that to be the case. An OIC is a legitimate alternative to declaring a case currently not collectible or to a protracted installment agreement. It is crucial that professional representation be obtained in preparation and submission of an OIC as relatively few are approved.

The IRS will consider an OIC on 3 different bases:

Doubt as to Liability - This means that there is legitimate doubt as to whether the taxpayer owes all or part of the assessed tax liability.Doubt as to Collectability - This means that it is doubtful that the taxpayer could pay the liability in full within the remaining statutory period for collection by liquidating assets or through current installment agreement guidelines.Effective Tax Administration - This means that there is no doubt as to the liability or collectability but that exceptional circumstances exist that will allow the IRS to consider an offer. In this instance the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.

An offer must meet certain financial criteria in order to be approved. Simply stated the offer must show that the taxpayer's net assets and future disposable income are not enough to pay the full debt. If that is the case and there are no conditions that will lead the IRS to believe that the situation will change, then the likelihood of an approved offer is greater. 

A taxpayer's net assets are equal to what they can earn from the sale of any items that they own such as equity in real estate, automobiles or investments. A taxpayer's future disposable income consists of their current income less expense amounts allowed to support the health and welfare of the taxpayer and their dependents. While this may sound simple it is actually very complex because there are many details to consider. Only professionals who deal with these matters on a regular basis are equipped to understand the total picture and communicate effectively with the IRS. It cannot be emphasized enough to seek professional representation when considering an offer in compromise since the average taxpayer has never prepared anything similar to it or has never faced any process similar to the one that is followed once an offer is submitted.

Upon submission of an offer from the taxpayer the IRS will perform an investigation in order to verify the numbers. They will conduct interviews and review information such as previous tax returns, bank statements, real estate records, motor vehicle records and credit bureau reports just to name a few. Remember an agent's goal is to substantiate the numbers. They are accountable to superiors for the work that they do so they go beyond simply asking a few questions...they conduct an all out financial investigation to ensure that the taxpayer cannot hide any assets or income in order to avoid paying the tax that they owe.

When submitting an offer in compromise the taxpayer is required to submit a $150 application fee plus a 20% down payment if choosing the lump sum cash offer or the first installment if choosing a periodic payment plan offer. A taxpayer can request an exception to these requirements because of their income level but must submit the proper form along with the offer. The amount of time the taxpayer has to pay off the debt depends on the offer plan that is chosen. If the taxpayer is already on an installment agreement they may stop making payments on that if they choose the periodic payment plan offer so they can make payments on that.

Once an offer has been accepted the taxpayer is required to honor the terms of the agreement until the amount is paid in full and is also required to remain in compliance in the filing and payment of all required taxes for a period of five years or until the amount is paid in full, whichever is longer.

An offer in compromise can be the answer to a taxpayer's tax problem if the circumstances are right and it can help avoid collection action that possibly includes a bank account levy or a wage garnishment. However professional representation is crucial since only a relatively small portion of the offers received are approved. If a taxpayer is looking for a solution to a big tax problem this could be the one.

Trace George is a Certified Public Accountant and is the Executive Vice President of Action Tax Relief headquartered in Abilene, TX. Action Tax Relief provides services to individuals who are facing signficant tax problems with the IRS. We partner with consultants and CPAs in order to assist taxpayers through the process of dealing with the IRS to resolve their tax issues, including tax levies and liens.

(c) Copyright Trace George. All Rights Reserved Worldwide

View the original article here