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IRS No Longer Limits the Innocence of a Spouse

Friday, November 4th, 2011

The IRS is making some common sense reforms to some of its arbitrary rules by instituting new guidelines in connection with “innocent spouse relief requests”.

An innocent spouse is classified as a person that had no knowledge that his or her spouse was defrauding the IRS by underpaying their taxes.

Until this change in regulation, there was a two year limit that was applied to any innocent spouse attempting to file a relief request. The change applies to all future requests and will retroactively be applied to previously denied claims.

The IRS change only applies to the equitable relief provision. This provision absolves the innocent spouse of any liability in paying past due taxes and relieves them of any interest or penalties associated with the unpaid taxes. Innocent spouses must prove that at the time of signing the joint tax return, they had no knowledge of any wrongdoing on behalf of the guilty spouse.

If a request is approved, the IRS allows the innocent spouse to pay the taxes that they are responsible for, but relieves them of any penalties and fines associated with the misfiling of the taxes.

The intent of the law was that an innocent spouse would have two years to file a request for relief. However, this law did not take into account spouses that were victims of domestic violence and abuse.

Many members of congress have been lobbying for a change in the regulation for some time now. The IRS receives 50,000 requests annually for innocent spouse relief. Of those 50,000, 4%, or 2,000, requests are rejected because they are outside the 2 year limit.

This change in policy will now help 2,000 innocent spouses avoid the penalties and fines for something that they were never aware was happening.

All future requests will be processed without looking at a term limit. However, if you have had a previous request denied due to the 2 year limit, you must file an IRS Form 8857 “Request for innocent spouse relief”. The IRS will not apply the two year limit in any active litigation.

Tags: collection, irs, paying taxes, Spousal releif
Posted in Common Questions, IRS Education, Newsworthy | No Comments »

Is it possible to pay the IRS “pennies on the dollar” and have the rest of your tax bill forgiven?

Thursday, October 27th, 2011

Yes-it is possible…..but it’s not very likely.

It’s called an Offer-In-Compromise- and it used to be the only legitimate way to negotiate an actual lowering of the amount of taxes owed to the IRS by a taxpayer…sometimes far less.

However, since the IRS has seen so much “abuse” of this particular method of tax relief in recent years, they have shown by their actions that they are less and less apt to accept an Offer-In-Compromise.

Tags: collection, paying taxes, tax questions
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Is There Really a Way to Pay the IRS Less Than You Owe?

Monday, September 12th, 2011

There’s a legal tax relief method that just might allow you to pay the IRS less than the total tax that you owe them…I thought that might get your attention. Of course, as with any ‘program’ offered by the government, it comes with strings attached (imagine that…). Let me fill you in on the pros and cons of a program called…

The IRS Partial Payment Installment Agreement…“Is It Really a Way to Pay Less Than You Owe?” The program was created as another way for taxpayers to pay their tax debts using installment payments – but with the possibility that the once the payment plan was completed, any outstanding debts that remained that haven’t been paid would be erased. Up until the time this program was created, the only way a taxpayer could have any part of their tax debt wiped clean without it being paid was to reach an Offer-In-Compromise Agreement (OIC) with the IRS. The Partial Payment Agreement may be a promising option for eliminating tax debt without being forced to pay the entire amount due.

So What’s the Catch? As you can imagine, it’s not as easy as telling the IRS you can only afford to pay $10 a month for a year and that’s it. Not so fast. In fact, the downside to a Partial Payment Agreement is that the payment plan could last up to 10 years. So, if you owe, say, $25,000 after you consider your tax plus fees and interest. To pay this off in 10 years would be $208/month.

However, if you can prove that you can’t afford a payment of $208 per month, and say you can only pay $125, after 10 years you would have paid $15,000. If the IRS agrees to the $125/month payment, at the end of the 10 years, the balance of what you owe – $10,000 – could be forgiven.

Hold on – there’s a caveat…the IRS reserves the right to review your finances. If they determine at a later time that you can afford more than $125, they will reassess your ability to pay…If your financial situation has improved somewhat, they may demand you pay more than the $125 per month installment payment.

However, if they find that your financial situation has improved significantly, there’s a chance that they could terminate the agreement altogether.

Tags: installment agreements, paying taxes
Posted in Common Questions, IRS Education | No Comments »

If I’ve Accurately Filed My Taxes Can I Get Sent to Jail?

Monday, September 5th, 2011

Question: If I’ve Accurately Filed My Taxes Can I Get Sent to Jail?

Answer: If You’ve Accurately Filed Your Taxes You Cannot Get Sent to Jail. However…

…Don’t be in a hurry to celebrate…Although jail time is arguably the worst thing that can happen, it’s not the only ‘punishment’ from the IRS that you should be wary of. By not taking action and facing your IRS debt problem, you could face any or all of the following severe consequences:

*Wage garnishment

* Seizure of your real estate

* Seizure of Social Security benefits

* Seizure of 401(k)’s, IRA’s

* Seizure of Cars / Boats / Houses

* Seizure of Accounts Receivable

* Seizure of Cash Loan Value of Your Life Insurance

* Seizure of Commissions Owed to You

Tags: bank levies, filing taxes, tax liens, wage levies
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Can the IRS take your money?

Monday, July 18th, 2011

Question: Can the IRS Take Your Money If You Don’t Give It to Them Voluntarily?

Answer: True. If you’ve been notified by the IRS either over the phone or by mail that you owe them, that’s all the warning you get.

If after contact, you don’t pay them completely and voluntarily – they have the right to take every penny that you owe from them…one way or another. They don’t have to take you to court or sue you to get their money. If they’ve sent the collection notices and you’ve refused to pay or haven’t paid in full – that’s all they need to do.

That’s when it can get ugly:

-They can dip straight into your bank account and take your money

-They can garnish your wages or salary

-They can take your social security, 401(k) or IRA’s

-They can take any money owed to you – like accounts receivable or sales commissions.

If you are a business that owes payroll taxes, even declaring bankruptcy will not eliminate your requirement to pay the payroll tax.

However, if you’re unable to pay the taxes due, there may be some other payment options that will enable you to keep from having your assets seized, a lien put on your property or criminal charges being brought against you.

Tags: paying taxes, tax laws, tax liens, wage levies
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Can the IRS reach into your bank account?

Thursday, April 7th, 2011

Imagine mailing off a check for your mortgage payment and being notified by your bank that there are “insufficient funds”. In other words, your check bounced. In bewilderment you reply, “…That can’t be right. I know I had enough money in the account to cover that check…there must be some mistake…”

The IRS has seized the money in your bank account. The bank representative on the other line says “uh…hello…are you still there?” You manage to get out ”Um…yeah…I’m still here…uh…let me call you back” “What would you like us to do about the check?” they ask. “…um…I’ll take care of it…uh…just let me call you back”, you manage to get out before you hang up quickly.

Your mind starts racing, thinking about what other checks you wrote that are now going to bounce. What else is the IRS going to do to you? Are they going to start dipping into your paycheck, too? Will they take your house, your car,…everything?

Don’t Think It Could Happen to You? Have you developed a false sense of security? Maybe the IRS placed a lien against your property as a “warning shot across the bow”, but you haven’t responded. Sure, the tax lien can ruin your credit and make it virtually impossible to sell your house, but it doesn’t necessarily put a damper on your day-to-day finances.

Besides, the fact is – a tax lien doesn’t necessarily give the IRS what they really want…the tax money you owe them. That’s when they start getting nasty…

The IRS Can Take Your Money If You Don’t Give It to Them Voluntarily. If you’ve been notified by the IRS either over the phone or by mail that you owe them, that’s all the warning you get.

They can dip straight into your bank account and take your money

They can garnish your wages or salary.

They can take your social security, 401(k) or IRA’s. They can take any money owed to you – like accounts receivable or sales commissions. Plus, they can seize your property: Cars / Boats / Motorcycles/ Homes / Vacation Property / Investment Property.

They’ll do it too. Consider this… from 2005 to 2006, levies increased by 36% Just ask Christopher Gronski of Rochester, New Hampshire. As the owner of a window-washing company, he sincerely does not believe that the IRS has the right to tax him. But they still levied his bank account and took his money.

Don’t Let This Be You It’s Not Too Late – Yet. If you’ve already been contacted by the IRS, time is wasting. The countdown has begun and when the count is up…they’ll come for your money. You need serious help – it’s time to contact a professional.

Tags: bank levies, irs help, tax liens
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Can the IRS run out of time to collect your taxes?

Friday, January 21st, 2011

Yes. Did you know that the IRS can’t hound you forever to pay your taxes?

In fact, they have 10 years to collect – and if they don’t, your debt is erased. It’s called the Statute of Limitations. But don’t get too excited yet. As you can imagine, with the IRS, there’s a little more “red tape” involved than that…

For taxes assessed on or before November 5, 1990, the IRS does have a 10-year period from the time that the tax is assessed to collect the tax – not from the year the taxes were due. So, in other words, if you waited to file your 1998 tax return until 2000, and the taxes were assessed in 2002 – the statute of limitations doesn’t begin until 2002. Now the IRS has until 2012 to collect taxes that were due in 1998.

Tags: statute of limitations
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Am I Non-Collectable to the IRS?

Wednesday, December 15th, 2010

One way to get out of IRS debt is to be declared “Currently Non-Collectible” (CNC) by the IRS. Note the term “Currently”…

As the name implies, Currently Non-Collectible means that the IRS considers that your current financial situation makes it impossible for you to pay your taxes, and they determine that they cannot collect the money from you…at least not for now.

So, in other words, being declared CNC is a potentially short-term fix to your IRS problem. In the end, you may still have to pay the taxes you owe (plus penalties and interest) once you start making more money.

The interesting thing about being declared Currently Non-Collectible is that it may last indefinitely. If the IRS monitors your future W-2’s and sees that your income has not increased by 15%-20%, your Non-Collectible Status stays “current”.

The IRS usually gives you some breathing room and reevaluates your situation after 18-24 months. If by that time you’re showing positive cash flow, you may be put on a payment plan.

However, if you are declared CNC, it doesn’t get you off the hook for paying your taxes in future years. In other words, if you’re declared to be Currently Non-Collectible for the taxes due for years 2004-2006, you will still owe the taxes due for the year 2007, 2008 and so on.

In fact, you must pay these future taxes in full and on time or you’ll blow it big time. If you neglect to pay your taxes for future years, or worse – you don’t file,… the whole CNC deal is off.

If this happens, the IRS will come after all of the money you owe them, and they may use garnishments, levies, seizures, liens, and all of the “nasty” tactics at their disposal to get their money.

If you’re thinking “man, that sounds like it’s for me…” don’t rush to the phone to call the IRS just yet. You see, what you list to the IRS as being “ordinary and necessary living expenses” – causing you not to be able to pay…may not jive with what the IRS considers “ordinary and necessary”.

And guess who has the last word? The IRS, of course. Your financial situation will be put under tight scrutiny. Some of the expenses that you consider to be “ordinary and necessary” won’t fit the IRS definition of ordinary and necessary at all and will be rejected altogether. Now you’re on the hook for a monthly payment that you can’t afford…but the IRS “thinks” that you can pay it. Not a good situation to be in.

Tags: cnc, paying taxes
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Can You Really Pay the IRS Pennies on the Dollar?

Thursday, November 4th, 2010

Is it really possible to pay the IRS “pennies on the dollar” and have the rest of your tax bill forgiven? Yes – it is possible…but it’s not very likely. It’s called an Offer-In-Compromise – and it used to be the only legitimate way to negotiate an actual lowering of the amount of taxes owed to the IRS by a taxpayer…sometimes far less.

In a press release dated October 2004, the IRS stated “This program serves an important purpose. But we do warn taxpayers to watch out for unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “Taxpayers should not be duped by high-priced promises.” In fact, as of 2006, the IRS now rejects 85% of all Offers-in-Compromise.

Although an Offer-In-Compromise is one option for paying off IRS debt, it may not be the right option for you. There’s no sense in pursuing this payment option with 15% success rate if there’s little hope that it will be accepted.

In fact, if you choose to hire a lawyer to represent you before the IRS, it’s critical that he/she is looking out for you and only wants the best outcome for your case. Since the IRS only accepts 15% of Offers-In-Compromise, any good lawyer representing you must have full knowledge of all other options available through the IRS. Plus, they would need to be able to thoroughly examine your case before they ever made a suggestion of the best action to take.

There’s also a new plan available: the new Partial Payment Installment Agreement (PPIA) enacted in January of 2005 is a form of payment that may allow you to pay off your taxes and have part of the debt forgiven. With this new method, the IRS considers how much you owe before the 10-year statute of limitations runs out.

Legally, a tax professional can represent you to the IRS even if they live thousands of miles away from you. But is that what you want when you’re dealing with something as stressful as IRS problems?

Or would you rather have someone who you can speak with face-to-face…who lives in your city…who has a reputation to uphold in your community?

Tags: collection, installment agreements, oic, paying taxes
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