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Taxing Mortgage Debt Aid

September 19th

Even in the wake of the foreclosure crisis, many homeowners continue to struggle with mortgage debt. While the government has taken some initiative to help families save their homes and reduce their debts, another issue still lurks around the corner. A special mortgage debt assistance exemption is set to expire at the end of this year, which could leave many owing taxes on their aid.

Non-Taxable Income

The Mortgage Forgiveness Debt Relief Act was passed in 2007 and allows taxpayers to exclude income from the discharge of debt on principal mortgage loans. In other words, if a lender reduces the amount owed on the loan for a borrower, this money is generally considered “income”. Under this act, the “income” is not eligible for taxation, giving homeowners a break from an increased tax liability.

As we enter the fourth quarter of the year next month, many are growing increasingly concerned about the fate of this bill. If it is extended, homeowners will continue to receive much needed assistance, but could cost the national budget. If the bill is cancelled, it could boost our national financial position, but cost homeowners hundreds or thousands of dollars in added tax liability. The concern is that homeowners already experiencing financial trouble will end up further in mortgage debt, personal debt, with an added problem of tax debt.

 

 

Tax Debt Programs

June 6th

Finding yourself in tax debt is not a welcome position to be in.  Regardless of how you arrived at this point, the goal should be to find a way out of the strangle hold that this burden can cause.  Many Americans find themselves facing the decision to seek help and relief from such burdens caused by back taxes.  The good thing to remember though is that there is always a way out.  The government offers many tax relief programs.

Getting Tax Debt Help

Sometimes, the answer may be as easy as contacting the IRS directly via phone or by visiting your local IRS center and speaking with a representative.  Let’s face it: many of those in tax debt have the ability to pay their debt off but they just need a little assistance in doing so.

One of the most typical options the IRS offers to assist you is by arranging payments.  They are very willing to sit down with you and determine what a fair amount is to make during monthly payments.  One matter that you need to understand though is that by choosing this route you will be charged an initial penalty and you will also be required to pay interest on your balance.  All in all, the extra charges are well worth the relief that you will feel from having been given an option to relieve yourself of the debt.

If the option of a IRS payment plan does not work for you or if you have found yourself so far in debt that it seems the amount is more than you can handle, then the IRS does negotiate reductions in the total amount owed.  If you have reached the point of needing to choose this option, it is recommended that you do so with assistance.  This process can be a bit more challenging and the help of a tax debt lawyer will most likely provide you with a better opportunity of succeeding.

 

Legitimate Tax Debt Relief

April 4th

After much attention swarmed over the court troubles of TaxMasters last week, many consumers are left questioning the legitimacy of tax debt relief services. Although TaxMasters is in trouble for mismanaging funds and allegedly scamming customers, there are plenty of reputable tax debt relief services available. The trick is knowing what to look for and how to go about resolving your tax debts.

Finding The Right Help

TaxMasters was a key player for many years, providing one of the largest scaled tax debt relief operations in their area. Even though they advertised heavily on radio and television, consumers should not be automatically turned off by a company that has similar means of communicating with potential customers. The trouble most people encounter when attempting to resolve their debts is a lack of knowledge about their options.

Consumers should know that back taxes can be resolved directly with the IRS. There may not be a need to use the services of a third party company, but if additional help is desired consumers should consult with a tax attorney before deciding on how to proceed. Further, the programs offered by the IRS may also be claimed by certain third party companies. An Offer In Compromise or an installment plan is only legitimate if it is approved by the IRS. Anyone looking into one of these programs should ensure they always obtain written approval directly from the IRS and never assume a deal is negotiated on their behalf. Lastly, consumers should get to know the IRS better. Their website is full of helpful information that can better educate consumers about general tax information, laws and even ways to lower their tax liability.

 

 

Different Types Of Tax Debt

February 8th

Not all tax debts are the same, which means that different types of tax debt are resolved differently.   While most people look for ways to resolve their debts directly with the tax assessor, there are certain programs available to help those who cannot afford to repay their debts in one lump sum.

Resolving Tax Debt

Income tax debts are the most common type among taxpayers. They arise from large tax liability burdens and foreseen circumstances. While most people assume tax debts are not eligible for bankruptcy protection, some income tax debts may actually qualify.

In general, tax debts must meet the following conditions in order to be eligible for a debt discharge: (a) older than three years, (b) have a corresponding tax return filed with the IRS and (c) not be associated with fraud. The IRS also offers for taxpayers to resolve their debts through an installment plan or Offer in Compromise. These programs are used to help taxpayers that cannot afford to repay their debts quickly or in one payment.

Business tax debts, such as past due payroll taxes, are different than income taxes. Because these debts are important for maintaining business operations, owing the IRS business taxes can put the future of the company at risk. Tax liens, wage garnishments and seizure of operations are all steep consequences associated with business tax debts. However, the IRS does offer ways for businesses to get caught up on their tax debts and remain without consequences. Business owners may be able to negotiate a payment arrangement directly with the IRS.

Property taxes are also a cause for concern among taxpayers. Unlike personal taxes, back due property taxes can lead to liens against the property and, in some cases, foreclosure. Homeowners who are significantly delinquent on their property taxes may find that their homes are at risk of seizure. However, most property tax assessors also offer tax repayment programs that help the homeowner get caught up over a series of smaller payments.

 

Tax Debt Solutions

January 4th

Unpaid taxes are a surprisingly common occurrence. Most people do not set out to owe the IRS money, but end up in tax debt due to unforeseen tax liabilities or financial hardships. In either case, the IRS can be very persistent when collecting their money and may even apply steep tax penalties. Luckily, the IRS offers several ways for taxpayers to resolve their debts.

Solutions Ahead

If you suspect your tax liabilities are simply inaccurate, you can request a tax liability review. The IRS is willing to conduct a review of your taxes in order to check for accuracy. You may also want to consult a tax lawyer who can help determine if any mistakes have been made or assist you in finding a tax debt payment solution.

If your taxes are accurate, but you have had numerous penalties applied to your debts, you may  be able to request an abatement. The IRS Penalty Abatement Program may remove a portion, or all, of the tax penalties applied to your overall debt liability. However, you will be required to prove financial hardship in order for the IRS to lower or eliminate penalties and interest.

If you know your debts are accurate and you cannot afford to repay your debt, the IRS offers two plans to assist in debt repayment. An installment plan allows you to repay your debts in monthly payments over a two to three year period. An offer in compromise is a type of tax debt settlement plan in which you negotiate a lowered tax debt liability bill to be paid over time.  Both plans are designed to meet the needs of taxpayers experiencing financial hardships.

 

 

What Is a Taxpayer Advocate

October 4th

tax advocateIn order to assist taxpayers with the very contemplated business of paying taxes, the IRS now offers a Taxpayer Advocate Service. This is an independent organization that is within the structure of the IRS. The job of the Taxpayer Advocate Service is to assist those taxpayers who are currently experiencing economic hardship, those who need help in resolving tax problems that cannot be resolved through normal channels, and those who believe that an IRS system or procedure is not functioning as normal and requires additional assistance.

Getting an Advocate to Help

If you are having trouble figuring out your tax situation, contacting the Taxpayer Advocate Service is a wise decision to make. It is never a good idea to let tax debt problems fester, as this can result in serious trouble coming to knock on your door at a later date. Even better, the service, offered by the IRS, is entirely free. Be sure to take advantage of the Taxpayer Advocate Service if you need some extra help figuring out the IRS system. Notice that the Taxpayer Advocate System is not designed to function as a tax-filing service. It is an assistantship only.

For more information regarding the Taxpayer Advocate Service, and to learn more about how this program can help you restructure your tax life and save you a lot of trouble and headaches in the process, be sure to check out their website at www.IRS.gov/advocate. From there, you can file form 911, which is the Request for Taxpayer Advocate Service Assistance.

 

 

Video Game Corporations Highly Subsidized by IRS

September 29th

The Internal Revenue Service offers significant tax incentives, including tax deductions, write-offs and credits, to numerous industries. Most notably, the US government offers tax incentives to companies conducting medical research, urban redevelopment and exploring alternatives to fossil fuels. However, these tax incentives are also provided to video game developers.

In fact, the video game industry is now among of the most highly-subsidized in the United States. This is chiefly due to video game developers being able to combine tax breaks associated with software development, online retailing, and the entertainment industry in a manner impossible in most other businesses. Video game developers are now receiving such significant tax breaks that even oil companies are questioning why such businesses should be so highly government subsidized.

Debate Continues over Validity of Tax Breaks

In total, the federal government doled out over $123 billion in tax incentives to corporations in 2010. According to the Joint Committee on Taxation, these corporations included those in industries such chicken farmers, as hedge fund managers, automakers, and oil companies. Estimates state that approximately $15 billion of this amount went the video game industry.

Advocates for these benefits actually claim that without such tax breaks, the United States would forfeit its technological edge over other nations; they claim it is these very tax breaks that allow technological innovators to work and operate within the United States. Without them, the supposition is that the companies would start moving their operations elsewhere, to countries like Canada that offer greater tax subsidies.

While the government accedes that these incentives are excessive, it is far easier to create a tax incentive than it is to eliminate it. Video game companies usually have large staffs of qualified tax attorneys who work to navigate the complex tax code to the company’s greatest benefit.

 

 

Tax Amnesty Bill Approved by the Missouri House of Representatives

September 22nd

tax amnestyThe Missouri House of Representatives has recently passed a bill that will provide penalty abatement and amnesty from payments of all interest and other additions to unpaid tax bills. The bill applies to all tax delinquencies related to unpaid taxes such as state income taxes and sales and use taxes that were due prior to December 31, 2010

Qualifying for Amnesty

In order to receive benefits from this bill, qualifying taxpayers must apply for amnesty. They must then file separate tax returns related to each period for which amnesty is requested, and then pay any unpaid taxes between January 1, 2012 and February 29, 2012. Qualifying applicants must also agree to comply with all state tax laws for eight years dating from the time the amnesty agreement was finalized.

The amnesty benefits are not available to any taxpayers who are under criminal investigation or involved in any civil or criminal litigation at the time of payment. This applies to any criminal or civil proceedings occurring in either Missouri or in a federal court for tax-related delinquency issues, such as tax debt or fraud.

If a participating taxpayer violates the terms of the agreement at any time during the eight-year period, the taxpayer will be responsible for any and all interest, penalties, and additions that were previously waived. Violation of terms results in these amounts being owed immediately and in full.

Potential applicants to this program should note that participation constitutes a waiving of any right to administrative and judicial rights of appeal in relation to the relevant tax dispute.

 

IRS Announces Outreach Program for Small Businesses and Practitioners

September 21st

In preparation for the approaching filing extension tax deadline, the Internal Revenue Service, in conjunction with the Department of Health and Human Services, has announced a new round of outreach programs aimed at small employers. The announcement is also aimed at the tax attorneys and other qualified tax professionals these small business owners rely on to inform them of their eligibility in relation to the Small Business Health Care Tax Credit.

The IRS is conducting this move in the hopes that fewer small businesses will miss out on the tax credit they are owed. The Small Business Health Care Tax Credit was included as part of last year’s Affordable Care Act. The tax credit is given to those small employers who pay at least half of the premiums for their employees’ health insurance coverage, under a particular arrangement as specified by the IRS.

The Small Business Health Care Tax Credit is aimed at providing small businesses and tax-exempt organizations with some additional funds to stay afloat during the current economic crisis. Qualifying organizations must primarily employ 25 or fewer workers, and pay out a total average income of under $50,000.

Outreach Program Includes New Media

As the current deadline approaches, and the IRS begins looking at the 2011 and 2012 tax seasons, the outreach program will include a number of information-spreading methods. Most notable is the IRS’ plan to use social media and other online venues to reach small business owners and hand out educational information.

In addition, the IRS will be working with insurance agents, brokers, and carriers who work with small businesses, aiming to ensure that participants in the health care industry are fully informed. The tax software industry is also expected to improve, in order to include the Small Business Health Care Tax Credit.

 

Using Tax Assistance Programs #2: Taxpayer Advocate Service

September 20th

back taxesUnlike the Low Income Taxpayer Clinics who exist mostly to help those in dispute, or who are suffering from a one-time problem with their tax debt, the Taxpayer Advocate Service (TAS) helps those who are experiencing more systematic tax troubles.

TAS is an independent organization within the IRS and is considered the public voice at the IRS. They provide a variety of services to those in need, including helping individuals who face tax liens or audits and assisting struggling taxpayers in settling back taxes.

The service is mainly aimed at those who are experiencing significant financial difficulty such as not being able to fund food, housing, or other necessities, as a result of their tax burden. TAS will also assist those who are experiencing tax problems with the IRS, such as audits or severe penalties for unpaid taxes. In addition, TAS will offer guidance or legal assistance to taxpayers who disagree with a decision made by the IRS, or believe a system is not working as it should.

Qualifying for the Taxpayer Advocate Service

TAS exists exclusively for those taxpayers who are experiencing extreme economic distress as a result of their tax troubles. In some cases this might mean not being able to provide necessities as a result of crushing tax debt. In other cases, TAS may assist those who are facing large financial costs, including legal representation.

There is at least one taxpayer advocate office in every state, and also in the District of Columbia and Puerto Rico. Those who think they might qualify can contact a local representative by visiting www.irs.gov/advocate.

 
 
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