IRS solutions
December 18, 2009 by taxman
Filed under IRS News Items
New Company Start-Up
In some cases modifying the status of your business or forming a new entity altogether can assist you in the resolution of your tax problem, while also allowing for a substantial savings. Please be advised that these strategies are extremely delicate. Each step must be taken carefully and receiving full consent from the taxing authorities is a must.
Levies: Release of Enforced Collection Actions
If you have received a levy to your bank account, accounts receivable, wage, social security, or disability time is of the essence to have this action reversed. Additionally, threats of asset seizure are real and require immediate attention. Nearly all aggressive collection can be reversed with the proper representation and presentation of how your case is going to be resolved.
Abatement of Penalties/Interest
The IRS is willing to forgive penalties associated with a debt if the taxpayer demonstrates and substantiates “reasonable cause criteria.” Interest is waived only in special circumstances. Even if your debt has been paid in full, taxpayers can still receive a refund of the penalties and/or interest that they have already paid.
Transcript Protests
Many taxpayers believe that their tax account balances are inaccurate. Fixing this problem is simple. We will order your account history via your tax transcript and compile the necessary paper work from you to help prove any inaccurate account balances. We will draft a written protest outlining the account balance concerns and carry out negotiations until a fair and final tax balance is achieved.
Lien Discharges or Subordinations
If you have experienced trouble in obtaining financing or selling of real estate, United Tax can assist through the IRS’ Certificate of Discharge and/or Subordination applications.
Offers in Compromise
This program is designed to settle tax debts for less than the full tax, penalties, and interest owed. If you have minimal equity in assets, minimal net income, believe you do not owe the tax due, or will experience a hardship by paying the debt, please cal United Tax to speak with one of our licensed Enrolled Agents Or Tax attorneys to see if you can profit from this IRS program.
Installment Agreement
Each taxpayer has the option to resolve their debt via a monthly payment plan. These plans can be arranged based off of your current cash flow, projected cash flow, seasonal revenue streams, and also as a tiered agreement that calls for annual increases of the monthly payment amounts.
Trust Fund Recovery Penalty Representation
If a corporation fails to pay its IRS Form 941 Withholding Taxes, any individual deemed either willful or responsible for the tax accrual can be personally assessed the Trust Fund Recovery Penalty. This penalty can be assessed whether your corporation is in business or not. If you are assessed, you can appeal the assessment. These appeals are time sensitive. The IRS also reserves the right to collect from the corporation and the individuals simultaneously. Each of our business owners are fully protected from individual collection, while we work to negotiate a formal resolution strategy from their company. Additionally, each of our business agreements we reach with the IRS are drafted to protect our owners from any future collection tactics through their individual income or assets.
Call United tax (877)530-6505 0r (866) 960-2301 If you have any Questions on these or other IRS resolution Programs.
Tax Preparation
United Tax can assist clients in the preparation of any and all outstanding returns. If we cannot meet your accounting needs, we can, in most cases, refer you to a reputable accounting firm for assistance. As taxpayers begin to fall out of full compliance, filing tax returns typically gets pushed to the bottom of the priority list. By the time most of our clients address the problem, they quickly find out that 2 or 3 years worth of 941’s (Withholding Tax), 1040’s (Personal Income Tax), 940’s (Federal Unemployment Tax), 1065’s (Partnership Income Tax) or 1120’s (Corporate Income Tax) have gone un-filed. Getting current with return filings is not optional and will be required in order to reach your goals in the resolution process.
Call United Tax (877) 530-6505 or (866) 960-2301 or Visit our Sites http://taxcut2010.us/ http://www.taxcut2009.us/
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How Taxcut 2010 Helps Taxpayers
December 10, 2009 by taxman
Filed under IRS News Items
How to Remove IRS Tax Liens
The IRS possesses wide powers as far as tax collection is concerned. When a taxpayer defaults on the tax redemption, filing for a lien is the first activity they carry out to recover the dues in the form of IRS tax debt. As per the law, a lien attaches to all the properties and possession owned by the taxpayer, once a federal tax notice is “served”. This indicates that the IRS gets a legal right over the assets and bank accounts owned by the taxpayer to recover IRS debt. To make the lien more effective, it’s required to be filed in the “public records” system, which is usually the local county office where individuals file their tax returns. The IRS initiates this legal instrument if it feels the individual is neglecting the payment of outstanding tax dues.
IRS tax lien implications
The filing of a lien can have an adverse implication for the taxpayer. Once the lien is served, it imposes an encumbrance on the assets owned by the tax debtor. Due to the imposition, the credit rating of the individual decreases considerably. Normally, credits limits are issued against the security offered by the assets owned by the debtor. The filing of the tax lien by the IRS has a strong effect of advertising to the world that a particular person is a tax defaulter, and a “wrong one”. No creditor likes to provide credit facilities to a person bogged down with “bad reputation”, since liens are associated with Hugh recoverable liabilities which proceed credit recovery by the lenders if the borrower exhibits delinquency. Getting fresh loans becomes almost impossible for such a person.
Tax lien solution
So the basic question is if a tax lien is in fact imposed, what’s the solution? The recommended thing to do is to clear the tax debt as soon as possible, and eradicate the imposed lien. This can only be done by redeeming the IRS taxes. The IRS is obliged to “release” the lien and make it “ineffective” within thirty working days after the tax dues are paid in full and all outstanding penalty is redeemed.
Wage garnishment
If the debtor cannot pay the entire due amount in one lump sum, the taxpayer holds the right to make a request for making the payments in installments. Once a monthly installment schedule is drafted, it becomes possible to request an immediate release of the lien by redeeming the IRS debt. However, the IRS may entertain this request if they “feel” it’s OK to remove the protection, and the tax debtor is certain to redeem the taxes. However, there’s one more option available in case the IRS decides not to release the lien. It’s possible to undergo wage garnishment and pay the outstanding tax through payroll deduction from wages, or electronic clearance from debtor’s bank account. When consent is given for such automatic deduction, the IRS starts recovering the taxes from the monthly pay.
Third party guarantee
Another option is to provide a certain guarantee offered by a third party, in which case the guarantor “promises” to redeem the taxes in the event the tax debtor fails to make the payments. This option can also be in the form of a “bank guarantee”. The IRS generally releases the lien if they are convinced about the regularity in the monthly payments leading to a total pay off over time by the IRS tax help provided by the guarantor.
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How to Remove IRS Tax Liens
December 10, 2009 by taxman
Filed under IRS News Items
The IRS possesses wide powers as far as tax collection is concerned. When a taxpayer defaults on the tax redemption, filing for a lien is the first activity they carry out to recover the dues in the form of IRS tax debt. As per the law, a lien attaches to all the properties and possession owned by the taxpayer, once a federal tax notice is “served”. This indicates that the IRS gets a legal right over the assets and bank accounts owned by the taxpayer to recover IRS debt. To make the lien more effective, it’s required to be filed in the “public records” system, which is usually the local county office where individuals file their tax returns. The IRS initiates this legal instrument if it feels the individual is neglecting the payment of outstanding tax dues. If you got a tax lien in the mail, don’t panic call UNITED TAX (877) 530-6505.
IRS tax lien implications
The filing of a lien can have an adverse implication for the taxpayer. Once the lien is served, it imposes an encumbrance on the assets owned by the tax debtor. Due to the imposition, the credit rating of the individual decreases considerably. Normally, credits limits are issued against the security offered by the assets owned by the debtor. The filing of the tax lien by the IRS has a strong effect of advertising to the world that a particular person is a tax defaulter, and a “wrong one”. No creditor likes to provide credit facilities to a person bogged down with “bad reputation”, since liens are associated with Hugh recoverable liabilities which proceed credit recovery by the lenders if the borrower exhibits delinquency. Getting fresh loans becomes almost impossible for such a person.
Talk to a Senior Tax consultant, We will consult you on how to deal with the IRS.
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Tax Cutting for 2010
December 10, 2009 by taxman
Filed under IRS News Items
Tax cutting has been a key policy of the administration of George Bush since coming to power in 2001. Under President Bill Clinton in the 1990s, only one modest tax cut bill was signed into law. Thus, when Bush came to power there was a pent-up demand for tax cuts, and the administration soon delivered. Here is a year-by-year summary.
2001. President Bush came into office promising a range of income tax cuts. He succeeded in getting a 10-year $1.35 trillion tax cut plan through Congress in 2001. It was the largest tax cut since 1981. Some key elements were:
- A reduction of individual income tax rates from 15, 28, 31, 36, and 39.6 percent to 10, 15, 25, 28, 33, and 35 percent;
- An increase in the child tax credit from $500 to $1,000;
- A phased-in reduction in estate taxes, and a one-year repeal in 2010;
- A big expansion of tax-favored retirement savings plans.
While some of the tax changes in the 2001 bill were not growth-oriented, the rate cuts and savings provisions were important reforms. But the 2001 law included complex rules regarding when certain tax changes would be in effect. The estate tax, for example, was repealed for 2010 but then reinstated in 2011. All the 2001 tax cuts are set to expire at the end of 2010 unless Congress acts to extend them.
2002. With concern about the economy in the wake of the recession, Congress enacted a “stimulus” tax cut bill in 2002. The main provision allowed businesses to “expense,” or immediately write-off, 30 percent of the cost of equipment purchases (later increased to 50 percent). Expensing is an important step toward converting the income tax to a consumption-based tax. It simplifies the tax code and spurs growth by removing taxes on the normal return to investment. Unfortunately, the partial expensing was only implemented temporarily and it has now expired.
2003. Under President Bush’s leadership, Congress passed a further package of pro-growth tax cuts in 2003. The centerpiece of the law was a cut in the top capital gains rate from 20 to 15 percent and a cut in the top individual rate on dividends from 35 to 15 percent. Tax experts had long discussed the distortionary effects of the excessive taxation of corporate equity in the U.S. tax code. Under the 2003 law, the capital gains and dividend cuts were set to expire after 2008.
2004. There have been increasing concerns about the uncompetitiveness of the complex and high-rate U.S. corporate income tax. The U.S. corporate tax rate is one of the highest in the world, and it has remained unchanged while other nations have made dramatic cuts. The chairman of the House tax committee, Bill Thomas, was determined to deal with the problem and he pushed for major corporate tax reforms. However, what ended up being signed into law in 2004 was a mixed bag. Some important simplifications in the treatment of foreign income by multinationals were included, but the federal corporate rate was not cut except for certain favored industries.
2005. The main tax event of 2005 was the appointment by President Bush of a commission to look into major tax reforms. The commission produced a very good report that described two detailed and workable reform plans for the income tax (see www.taxreformpanel.gov). Unfortunately, the plans were not as far-reaching as a flat tax, but they did include rate cuts, simplifications, and pro-savings provisions. Sadly, the White House has dropped plans for major tax reform for now, but reform may come back on the agenda in 2007.
2006. This year, Republicans have tried to tie up loose ends from prior tax legislation. They voted to extend the capital gains and dividend tax cuts for two further years (until 2010). But they were less successful in their effort to make estate tax repeal permanent, as repeal narrowly failed in a June Senate vote. A compromise bill with a cut to the estate tax rate might be passed later in the year.
The Years Ahead. While President Bush has been a supporter of pro-growth tax reforms, there are shortcomings in recent tax policies. For one thing, the tax code continues to get more complicated by leaps and bounds. Also, policymakers have not repealed the alternative minimum tax, a parallel income tax system that threatens to hit 30 million households by the end of the decade.
Another shortcoming has been the failure to make tax cuts permanent. Nearly all of the Bush cuts—individual rates, capital gains, dividends, estate tax—are set to expire after 2010. Sixty votes are needed in the 100-member Senate to pass permanent tax cuts. There are just 55 GOP senators, and they have faced a politically far-left Democratic opposition.
Republicans also have their own policies of big spending to blame. Tax cutting has been made more difficult because Bush has been the most profligate president in decades. In his first five years, 2001 to 2006, federal spending increased 45 percent and deficits have soared. It’s tougher to convince the few centrist Democrats in the Senate to go along with making tax cuts permanent when federal red ink is gushing non-stop.
The big spending policies of the Bush administration have been remarkably short-sighted economically and politically, as they have threatened Bush’s primary domestic policy success of pro-growth tax cuts. For its part, the Republican leadership in Congress has gone along with, and often encouraged, the spending feast of recent years. There are only about 50 serious budget reformers in the 435-member House. For the rest, it’s been a pork-barrel pigout in recent years.
The future of the Bush tax cuts depends to a large extent on the next president, who will enter office in 2009. A President Hillary Clinton (currently a senator from New York) may not favor extension of any tax cuts, but a president George Allen (currently a senator from Virginia) would likely try to extend them all. Whether the United States moves toward major tax reform, such as a low-rate flat tax, will also substantially depend on the next resident of the White House.
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Tax Bill, tax rate for 2010
December 8, 2009 by taxman
Filed under IRS News Items
BOSTON (MarketWatch) — The good thing about new tax bills, such as the Tax Increase Prevention and Reconciliation Act of 2005 or TIPRA for short, is that it keeps accountants, lawyers and financial journalists in business.
The bad thing about bills such as TIPRA, which President Bush signed into law Wednesday, is that it forces Americans to scurry about, revisiting and likely revising at great expense (and perhaps to great savings) their retirement plans.
In many cases that could be a task of Herculean proportion. For instance, the law extends until 2010 lower tax rates on capital gains and dividends, protects some from the alternative minimum tax and extends small-business expensing provisions.
And the law also contains changes in the “kiddie tax” rules and regulations on Roth IRA conversions. Fortunately, financial experts are hard at work paging through the new law, searching for things for Americans “to do” in its wake. Read more on the bill’s provisions.
Here’s their short list:
Capital gains and dividends
The Jobs and Growth Tax Relief Reconciliation Act of 2003 established a maximum tax rate of 15% for long-term capital gains and qualifying dividend income. For taxpayers in the lowest two tax brackets, the maximum tax rate is 5% and will drop to 0% in 2008. These rates were scheduled to expire after 2008, but TIPRA extends the rates that apply in 2008 for two years, through 2010, according to Forefield, a Marlboro, Mass.-based financial-education firm.
The extension results in a three-year window in which taxpayers can recognize long-term capital gains and qualifying dividend income with no federal income tax for lower-income taxpayers, writes Bernie Kent, co-author of PricewaterhouseCoopers’ Guide to Tax and Financial Planning 2006, in the current issue Steve Leimberg’s Estate Planning Email Newsletter. Currently the 15% tax bracket ends at $30,650 of taxable income for single taxpayers and $61,300 for married couples filing a joint return.
The big takeaway for preretirees and retirees is this: “This provision presents a planning opportunity now to begin making gifts of appreciated property within the $12,000 annual per donee gift-tax exclusion to lower-bracket children or parents in sufficient amounts for the gift recipient to sell the appreciated property and maximize the benefit of the zero capital gains tax opportunity for 2008, 2009 and 2010,” writes Kent.
John Battaglia of Deloitte says retirees should take the new tax rate into account when deciding what to invest in inside and outside their retirement portfolios. In some cases, it will make more sense to keep dividend-paying stocks in a taxable account rather than an IRA.
Roth IRA conversions
Roth IRAs have been described as the greatest retirement plan ever. Under current law, distributions from a Roth IRA are tax-free if distributed after age 591/2 and after the account has been open five years. What’s more, there are no required minimum distributions during the lifetime of the Roth IRA owner.
And TIPRA makes Roth IRAs even better, especially for those with modified adjusted gross income (MAGI) above $100,000. (Yes, MAGI. That would be adjusted gross income modified by IRA deductions, student loan interest deduction, exclusion of qualified bond interest and the like. Ask you accountant if in doubt.)
TIPRA eliminates the restriction that prevents Americans with MAGI above $100,000 from converting a traditional IRA to a Roth IRA. This change is not effective, however, until 2010. In addition, TIPRA provides that taxpayers who convert a traditional IRA to a Roth IRA in 2010 can spread the resulting “reportable income” over the following two years, including the income “ratably” in 2011 and 2012, says Forefield. Americans can, however, if they choose report 100% of the resulting income in 2010.
For financial experts, this part of the new law causes the most confusion and debate.
“The elimination of the $100,000 adjusted gross income ceiling for converting a traditional IRA to a Roth IRA starting in 2010 can reap big savings,” says Battaglia. That’s especially so, he says, if you are able to pay the tax with outside funds, not those in the IRA being converted.
For his part, Kent says affluent taxpayers would often search for ways to reduce their income for one year in order to qualify for a Roth IRA conversion. Now, however, TIPRA makes such action unnecessary for those who are willing to wait until 2010 to convert. “The repeal of the income limitation is likely to result in a large number of taxpayers with significant IRA balances choosing to convert to Roth IRAs,” writes Kent.
And the best news of all for high-income taxpayers? They will be able to take their time; they’ll have four more years to crunch the numbers on whether it makes sense to convert their traditional IRA to a Roth IRA or not.
Robert Keebler of Virchow, Krause & Co. in Green Bay, Wis., says the answer to question “convert or not?” will not be as easy as it sounds.
“You’ve got to factor in inflation, the client’s life expectancy, investment returns, and what the client’s tax rates will be in the future” he writes in Leimberg’s newsletter. “Obviously, the higher the (taxpayer’s) anticipated retirement tax rates are, the more appealing this provision is. Likewise, the advantages grow in proportion to the length of time the money is invested in the Roth and also rise as the assumed investment return goes up.”
Others, however, have a different analysis. They say the only factor that determines whether a person is better off converting to a Roth or not is the tax rate someone pays while saving the money versus the tax rate they will pay when they take distributions in retirement.
The new law also affects the rules regarding the conversion of a traditional IRA to a Roth IRA by taxpayers who are married filing separately. In the past those taxpayers could not make the conversion. Now, Ed Slott, author of “Parlay Your IRA Into a Family Fortune,” says the new law allows anyone to convert to a Roth IRA in 2010 and later years, including those who file married-separate.
Alternative minimum tax (AMT) exemption and tax credit extensions
The bill increases the AMT exemption for 2006. For 2005 the AMT exemption was $58,000 for married couples and $40,250 for single taxpayers. These amounts are increased to $62,550 and $42,500 respectively for 2006. Says Kent: “This provision will help millions of taxpayers who would otherwise have to pay AMT in 2006, since the exemption would have fallen to $45,000 for married couples and $33,750 for single taxpayers. However, Congress will need to revisit this issue for 2007 and future years.”
Uncle Sam is also extending the tax credits that can reduce AMT. Kent says only the foreign tax credit, adoption credit, child credit and saver’s credit were to be allowed to reduce the alternative minimum tax in 2006. TIPRA, however, extends the ability to reduce alternative minimum tax in 2006 to the following credits: dependent care credit, credit for the elderly and disabled, energy-saving credits, tuition credits and certain homeowner credits.
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