IRS Penalties | Resources for Taxpayers from US Tax Review

 

What are IRS Penalties?
Why did I get IRS Penalties?
What Should I do if I have Penalties?
How do I Know if I Should Contact a Tax Professional?
What are IRS Penalties?
The Internal Revenue Code imposes many different kinds of penalties as a result of late filing, late payment of taxes, and inaccurate, erroneous, or fraudulent tax tax returns. The most common penalties are for filing late or paying taxes late.
Typically, penalties are imposes in the form of fines, and relative to the amount of tax liability you owe. For example, failure to file you your tax return on time usually results in a penalty equal to 5% per month of your tax debt owed, penalized for as many months as you are late filing that tax return.
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Why did I get IRS Penalties?
If you do not file your return and pay your tax by the due date, you may have to pay a penalty. You may also have to pay a penalty if you substantially understate your tax, file an erroneous claim for refund, or file a frivolous tax submission. In general, if you did not satisfy your legal obligation to file your taxes accurately and pay on time, you will be penalized.
When penalties are assessed, the IRS will notify you, reference the applicable tax code you violated, and show how the penalty was calculated.
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What Should I do if I have Penalties?
USTR recommends that businesses and individuals facing IRS penalties consult a qualified tax professional. Many tax professionals provide a free consultation, which can ensure that you are treated fairly by the IRS.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country.
Click Here to Find a Pro

Tax Lien | Resources for Taxpayers from US Tax Review

 

What is a Tax Lien?
How a Lien Affects You
How to Avoid a Lien
How to Get Rid of a Lien
What if I Can’t Afford to Pay my Tax Lien in Full?
What if I Want to Dispute my Tax Lien?
How do I Know if I Should Contact a Tax Professional?
What is a Tax Lien?
A tax lien is both a notification of your neglect or failure to pay your tax debt in full and a legal claim of the government’s interest in your assets, which could be levied (seized) to pay off a tax debt. A federal tax lien will be issued after the IRS:
Assesses your tax liability
Sends you a bill that explains how much you owe (Notice and Demand for Payment); and
You neglect or refuse to fully pay the debt in time.
The IRS files a public document, the Notice of Federal Tax Lien, to alert creditors that the government has a legal right to your property. If you have received a tax lien, you need tax resolution as soon as possible.
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How a Lien Affects You
A federal tax lien can affect one or more the following financial aspects of your life:
Assets
Credit
Business
Bankruptcy
The IRS attaches a lien to these financial aspects of your life to indicate their intent to claim a tax debt. If you have a tax lien filed to you or your business, you are at risk of losing property/vehicles/or other assets, and you may even jeopardize your business assets including accounts receivable.
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What Happens if I Don’t Resolve my Lien?
Failure to resolve a lien can result in a levy or seizure of your property and/or assets.
It will also expose you to penalties, fees, and interest, which can be very costly.
You may also continue to receive solicitations from creditors and resolution firms, and even have difficulty applying for credit on a home, vehicle, or bank account.
You should not ignore a tax lien – pursue tax resolution as soon as possible.
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How to Get Rid of a Lien
Paying your tax debt in full is the best way to get rid of a federal tax lien. The IRS releases your lien within 30 days after you have paid your tax debt, which will prevent a Levy or Seizure of your property and/or assets.
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What if I Can’t Afford to Pay my Tax Debt in Full?
USTR recommends that businesses and individuals unable to pay their tax debt in full consult a qualified tax professional. Many tax professionals provide a free consultation, which can inform you of your rights and options. In some cases, you can save money by setting up an affordable payment plan.
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What if I Want to Dispute my Tax Lien?
USTR recommends that businesses and individuals who wish to dispute their tax lien consult a qualified tax professional. Tax professionals can represent you on your behalf to the IRS, which means you would have a tax expert protecting your rights. In some cases, having an expert work your tax resolution case can save you thousands of dollars that you would have missed had you resolved your case on your own.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country. Click Here to Find a Pro

Tax Solutions | Resources for Taxpayers from US Tax Review

 

Tax Solutions
There are a number of tax solutions available to you as a tax payer. Depending on your specific tax case, some solutions may be better than others. USTR recommends that you consult a quality tax professional when considering tax resolution options. Here are some common solutions:
Offer In Compromise (OIC)
Resolving Back Taxes
Penalty Abatement
Affordable Payment Plan
IRS Representation

Affordable Payment Plan | Resources for Taxpayers from US Tax Review

 

Affordable Payment Plan
What kind of Payment Plans are available?
How do I know which plan is right for me?
How do I Know if I Should Contact a Tax Professional?
What kind of Payment Plans are available?
There are several different types of payment plans, or installment agreements available through the IRS. There are plans that allow you to pay in full over an extended period of time, while there are others that provide extensions.
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How do I know which plan is right for me?
Determining which plan is right for you will require an evaluation of your tax debt, and a comparison of the available payment plans. Assessing how much of your tax debt is penalties and considering how much income you will have to pay off your tax obligation over time are important factors to consider.
USTR recommends that if you are considering a payment plan, you should consult with a quality tax professional before making a decision. There are many options available and it takes an expert to know which is best.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country.
Click Here to Find a Pro

IRS Representation | Resources for Taxpayers from US Tax Review

 

IRS Representation
What can IRS Representation do for me?
Why would I need IRS Representation?
What if I’m not Sure What to do?
How do I Know if I Should Contact a Tax Professional?
What can IRS Representation do for me?
Having a professional represent you on your behalf to the IRS can be very beneficial. The IRS is tasked with collecting every penny of tax debt you owe. They are not “on your side” and they will utilize every option under the law to collect money from you.
Having representation can protect your rights and ensure that you are treated fairly by the IRS.
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Why would I need IRS Representation?
If you have a large tax debt or are facing one more tax problems (such as a Tax Lien), you will need tax resolution. Tax resolution occurs by dealing with the IRS. You may need to have phone calls or meetings with the IRS, during which you will make decisions on how you will pay your tax obligation. Having an advocate can resolve your tax obligation favorably and potentially save you hours upon hours of time.
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What if I’m not Sure What to do?
USTR recommends if you are considering getting IRS Representation you should consult a quality tax professional to see what advantages they can offer to you.
Many tax professionals provide a free consultation, which can inform you of the rights and options you have as a taxpayer. In many cases, you can save thousands of dollars or more by resolving your tax debt with the help of a pro.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country.
Click Here to Find a Pro

Offer In Compromise Formula | Resources for Taxpayers from USTR

 

What is an Offer In Compromise (OIC)?
Who gets accepted for an Offer In Compromise?
Consumer Alert for Offer In Compromise
How to Decide if an OIC is Right for You
How do I Know if I Should Contact a Tax Professional?
What is an Offer In Compromise (OIC)
An Offer In Compromise (OIC) is a program offered through the IRS that lets qualified taxpayers with unpaid tax debt negotiate a settlement for less than the total amount of the tax debt owed. When you hear ads on TV or the Radio about customers who saved huge amounts of money (sometimes hundreds of thousands of dollars), those ads are probably referring to people who successfully settled their tax debt with an OIC.
For taxpayers, an OIC seems like the best solution, but it is only a solution for qualified taxpayers. Good tax resolution professionals typically submit an Offer In Compromise for only 1 or 2 out of 10 taxpayers they work with because they know only a few cases will qualify for approval by the IRS. Bad tax resolution companies will submit as many offers as their clients are willing to pay them for, knowing full well that very few of their clients will actually qualify for approval of their OIC.
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Who Gets Accepted for an Offer In Compromise?
The Offer In Compromise program is designed for taxpayers that meet very specific criteria, and is only approved if the IRS believes that it is in its best interest of collecting current and future tax payments from the taxpayer. Some examples of criteria that must be met for consideration of an OIC settlement are:
Doubt as to Liability – showing reason why the tax liability may be incorrect
Doubt as to Collectibility – showing that the tax debt may be uncollectable, ever
Special Extenuating Circumstances – for elderly, disabled, or exceptional cases
A tax resolution professional is paid to know who qualifies and who doesn’t, as well as writing an Offer In Compromise that will likely get accepted by the IRS. If you are considering this solution, you should consult with a tax professional who is experienced at OIC’s and is willing to publish their success rate of approval.
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Consumer Alert for Offer In Compromise
Because an Offer In Compromise is so attractive to taxpayers, many tax resolution companies have tried to exploit the program and scam innocent taxpayers. Since 2004, the IRS has issued a consumer alert to warn taxpayers that there are predatory companies in the industry. Since 2004, many prominent tax resolution companies have declared bankruptcy and/or been sued with class action lawsuits. Companies like American Tax Relief, Roni Deutch, TaxMasters, and JK Harris are all recent examples of why taxpayers need consumer protections.
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How to Decide if an OIC is Right for You
If you are considering an Offer In Compromise (OIC) as a possible tax solution for your tax problems, we strongly urge you to consult a tax resolution professional by using The Review
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How do I Know if I Should Contact a Tax Professional?
An OIC can have big consequences, for better or worse, so don’t go it alone. If you’re considering it, consult a tax pro. Click Here to Find a Pro

Resolving Backtaxes | Resources for Taxpayers from US Tax Review

 

What are Back Taxes?
How do I prevent Back Taxes from building up?
What happens if I have Back Taxes?
What if I’m not Sure What to do?
How do I Know if I Should Contact a Tax Professional?
What are Back Taxes?
The term “Back Taxes” refer to tax debt that wasn’t paid when it was due. Typically, these are taxes that are owed from a previous year. You might owe back taxes if you were unable to pay on time, or if you failed to file your tax return on time and had tax liability that you owed.
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How do I prevent Back Taxes from building up?
By filing your taxes on time and paying your tax obligation in full, you will prevent Back Taxes from accruing. If you haven’t filed a tax return, it is better to file it than wait to see if the IRS will find out, even if you know you can’t pay your tax debt.
There are options for people who cannot afford to pay their tax debt in full. However, there are harsh penalties for failing to file. For example, the IRS can file your taxes for you if you haven’t done so on your own which can eliminate your ability to claim deductions and thereby reduce your tax liability.
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What happens if I have Back Taxes?
You will be required to pay your tax obligation, but there are options that could reduce the amount you owe. If you have back taxes as a result of unfiled tax returns, you should consult a tax professional and file your return as soon as possible.
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What if I’m not Sure What to do?
USTR recommends that businesses and individuals facing Back Taxes consult a quality tax professional as soon as possible. The IRS has strict penalties for those who delay.
Many tax professionals provide a free consultation, which can inform you of the rights and options you have as a taxpayer facing back taxes. In many cases, you can save thousands of dollars or more by resolving your tax debt with the help of a pro.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country.
Click Here to Find a Pro

IRS Penalty Abatement | Resources for Taxpayers from US Tax Review

What is Penalty Abatement?
How do I know if my Penalties can be Abated?
What if I’m not Sure What to do?
How do I Know if I Should Contact a Tax Professional?
What is Penalty Abatement?
Penalty Abatement is a tax solution that can help you eliminate penalties and interest incurred on your tax debt. It cannot remove the initial base tax debt amount that you owed before penalties and interest. You can apply for a penalty abatement if you have a reason why you should not be responsible for paying the penalties AND if you are able to pay your tax debt in full.
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How do I know if my Penalties can be Abated?
Typically you need to have a major grievance in order for the IRS to accept your application for an abatement. You also need to be able to pay your initial base tax debt amount in full.
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What if I’m not Sure What to do?
USTR recommends that businesses and individuals considering a Penalty Abatement consult a quality tax professional first.
Many tax professionals provide a free consultation, which can inform you of your options along with your likelihood of removing penalties and interest. In many cases, you can save thousands of dollars or more by utilizing a tax professional.
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How do I Know if I Should Contact a Tax Professional?
USTR believes that contacting a tax resolution professional is common sense. When you have a medical problem, you contact a doctor. When you have a car problem, you contact a mechanic. When you have a tax problem, you should contact a tax professional. Many tax professionals provide a FREE consultation and USTR can connect you with some of the best tax professionals in the country.
Click Here to Find a Pro

Taxpayer Resources | Resources for Taxpayers from US Tax Review

U.S. Tax Review is committed to helping tax payers in need. We provide a number of resources that will help you understand what you can do to reduce or eliminate your tax debt, and learn more about how USTR can help you get there.
Tax Problems
Learn more about common tax problems and what you can do about them
Tax Solutions
Learn more about common tax solutions that you may be eligible for
FAQ
Learn more about USTR and The Review in our frequently asked questions section
Blog
Read our blog which features tax tips, guest posts, and more
Helpful Links
View some helpful links that might provide the info you’re looking for
Common Forms
Download or read common forms for free

Offer In Compromise Formula

by Henry Taro – USTR Tax Pro ID #2103
published on Dec 4, 2012
The Offer In Compromise is perhaps the most complex, time-consuming, intrusive and intensive negotiations a taxpayer will have with the Internal Revenue Service. The IRS is extremely thorough in conducting their investigation; typically taking months (up to 24 months), with higher counter offers being made by the IRS, and with requests from the IRS for additional documents.
Each case is handled differently
No two taxpayer’s situations are identical; no two IRS employees / reviewers think exactly the same; therefore each Offer is ‘hand-crafted’. This takes skill and perseverance on the part of any Representative you might use. Generally speaking, there is no exact offer in compromise formula that will work every time.
IRS agents are cautious to accept offers
Since portions of an accepted Offer information is available for public view at designated IRS offices, the IRS seeks to avoid being embarrassed by making any mistakes in accepting an offer amount which might turn out to be inappropriately low. Only a fraction of the Offers submitted are ultimately accepted.
There has to be economic incentive to accept
The principle of an Offer is that ‘present value’ must be considered against ‘future value.’ Basically, an amount in hand today is more valuable than the same sum received far in the future. The IRS investigation is designed to determine the Minimally Acceptable Offer Amount. A careful, line by line analysis of a completed IRS form 433-A or 433-B and all required supporting documents will take place. Therefore you must be accurate and thorough with the entries on the 433-A / 433-B and the 656 Offer In Compromise packet.
The IRS considers these factors
The IRS considers the total of two sources of potential funds to determine the amount of the offer:
1. The current equity in your assets PLUS 2. Your expected /projected Remaining Monthly Income for the next 24 months.
Remember that most likely not all of your living expenses are allowable as priority over repayment of the tax debt. The IRS can and will dictate ‘ceilings’ to certain living expenses. The IRS will determine your Remaining Monthly Income by subtracting allowable monthly living expenses from the total monthly household income.
Other considerations and notes:
Generally, the IRS will not accept an offer if you can pay your tax debt in full via an installment agreement or a lump sum.
The IRS may file a Notice of Federal Tax Lien during their investigation.
The Statutes for Assessment and for Collection are extended by the submission of an Offer.
The IRS may contact third parties including credit bureaus without notification to you.
The likelihood that you will submit an OIC and get it accepted is considerably lower than that of a professionally submitted OIC.