Friday, December 12, 2008

Joint Filing, Joint Liability

The Internal Revenue Code is an amazing piece of work. Consider the case of a married couple filing jointly. Let’s suppose one spouse earns $120,000 in a given year and the other spouse earns $0. After filing their “married filing jointly” tax return they incur a $14,800 tax liability. For whatever reason the couple fails to pay the tax for a couple of years. Penalties and interest have now caused the liability to grow to over $20,000. The couple decides to call it quits on the marriage and they get divorced.

The spouse who earned $0 has been forced to re-enter the workforce and is now making $31,000 per year all of which is consumed with monthly obligations. One day this spouse receives a notification in the mail they owe the IRS over $20,000 and they want payment immediately! What do they do?

This is a very real situation and happens more times than people may realize. The fact of the matter in this situation is that the IRS views each spouse liable for the entire tax amount based on the joint filing status! There are a few options the disadvantaged spouse has in this situation. This requires the help of a true tax professional.

I Can't Find My W2s Or My 1099s

It is not uncommon at all to have a situation where a taxpayer has gone a long period of time with unfiled tax returns and cannot find their W2s or 1099s from prior years. This can create a severe problem for the taxpayer if they have someone prepare their taxes that doesn’t really know how to approach the problem. This is when it becomes necessary to get a professional tax preparer involved with the case.

The first thing a professional tax preparer will do will be to contact the IRS and obtain all of the information the IRS has in regards to the amount of income that the IRS has record of for the taxpayer. The tax professional will then verify this with the taxpayer to make sure it is correct. Once everything checks out then the tax professional will proceed with filling out the delinquent tax returns with the correct income information. This will save the taxpayer from many problems in the future!

Should I Call The IRS?

From time to time this is a question people ask regarding their situation with the IRS. Of course people can call the IRS regarding their situation. The question is should they? One thing people need to realize is that when discussing a matter with the IRS the IRS will always structure their questions in a way as to favor the IRS and not the taxpayer. Taxpayers have rights and often times the IRS will not tell the taxpayer what their rights are.
This usually winds up with a situation where the taxpayer comes out on the short end of the stick. I have seen this the results of such a situation. A taxpayer will contact the IRS about their tax liability in an attempt to work out some type of payment arrangement. The IRS will not take the proper steps to accurately determine what the taxpayer can afford to pay. The taxpayer gets scared and agrees to what the IRS states. The taxpayer gets into a payment agreement they really can’t afford and ultimately ends up not being able to make the payments and gets right back into trouble with the IRS. When confronted with a problem with the IRS it is in the best interest of the taxpayer to get professional tax advice from a true tax professional.

Beware Of The Taxman!

It’s December and Christmas is right around the corner and so is the taxman! Whenever a taxpayer owes the taxman money (the IRS) the taxman will contact the taxpayer and ask for his money. If the taxman does not get a response then the taxman will knock a little louder. If the taxman still does not get a response then the taxman will go to the taxpayers employer and say, “Mr. Employer, one of your employers owes me money. I have tried contacting your employee and they have not responded. Therefore I am demanding you (the employer) to send me a big chunk of your employee’s paycheck BEFORE you send anything to the employee.”

This is known as a levy and this is what the IRS will do if a taxpayer does not pay the IRS when the IRS comes knocking. There’s some good news however for the month of December from what I understand. The IRS will not be issuing notices of levies in the month of December! Great! This is very good news! But don’t be fooled! The IRS is just playing nice for the Christmas season. Once December passes the IRS will begin serving notices of tax levies hard and heavy beginning in January. If you get one of these notices call someone qualified to help with this situation. So as January approaches remember this, beware of the taxman! He’s just around the corner!

A Word About Tax Liens

A Word About Tax Liens

A federal tax lien is serious business! Consider the following information taken directly from the IRS website at: (,,id=108339,00.html#Notice)

Notice of Federal Tax Lien
Liens give us a legal claim to your property as security or payment for your tax debt. A Notice of Federal Tax Lien may be filed only after:
We assess the liability;
We send you a Notice and Demand for Payment - a bill that tells you how much you owe in taxes; and
You neglect or refuse to fully pay the debt within 10 days after we notify you about it.
Once these requirements are met, a lien is created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that we have a claim against all your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.
The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable, if you are a business).
Caution!Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. Therefore it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary.

If you have received notification from the IRS by way of Certified Mail and the IRS is threatening you with filing a tax lien TAKE ACTION IMMEDIATELY! Call a professional tax resolution firm to help you!

Friday, December 5, 2008

Tax Resolution Is A Secret - Part II

Effective tax resolution begins with working with someone who is knowledgeable of tax law and the rules and regulations of the IRS. The IRS will not willing divulge information to taxpayers that will be in the best interest of the taxpayer. By having the knowledge and not divulging it in essence keeps the information “secret.” Suppose we were all standing in front of a safe containing $1,000,000 in cash and I had the combination to the safe. Further suppose someone needed a portion of the money to help him or her in a dire situation. By not divulging the secret and providing the combination to the safe I have in essence withheld information to someone’s detriment. In this case I have chosen to keep the knowledge I have secret.

The “secret” to effective tax resolution is to get a tax professional involved. Research tax professionals to make sure you get someone who knows the laws and the rules of how the game is played. The rules are many, they are very complex and they change frequently. If you are dealing with a serious tax problem do not allow yourself to be victimized by allowing someone to withhold the knowledge you need. Get someone who has the knowledge and is willing to use it to your benefit. You will be very glad you did!

Tax Resolution Is A Secret - Part I

Depending on which dictionary you use you will find various meanings of the word “secret.” One definition is as follows, “designed or working to escape notice, knowledge, or observation.” Another definition is this, “kept from the knowledge of any but the initiated or privileged.” With these two definitions in mind consider the Internal Revenue Code. The code (tax law) has over 60,000 pages. Buried deep within this enormously complex “code” lies the answer(s) to ALL tax related problems. The problem is taking the time to read and understand the code. Therefore I raise the argument that effective tax resolution is in fact a secret.

Consider the first definition of the word secret listed above, “designed or working to escape notice, knowledge, or observation.” The tax code has been designed in such a way that provisions in the tax code that provide relief to taxpayers suffering with an oppressive tax debt easily “escape notice, knowledge and observation” of the common taxpayer. Therefore tax resolution is a secret. Consider the second definition, “kept from the knowledge of any but the initiated or privileged.” In this definition “the initiated” represents the writers of the tax law. These are the individuals who write the laws and make the rules. Therefore they are the “privileged.”

Therefore it is a true statement that tax resolution is indeed a secret. The tax laws are written in such a way that provisions of the code that would help taxpayers pay LESS than they owe is kept a secret from the taxpayer thus subjecting them to the full force of maximum taxation. The only way to overcome this obstacle is to hire someone who knows the laws and the rules. Enrolled agents is one group of individuals that can help taxpayers have a more even playing field when dealing with the IRS.