The Internal Revenue Service was reprimanded by the Treasury Inspector General for Tax Administration for failing to follow statutory requirements in notifying taxpayers when it files tax liens against them. TIGTA also found that the IRS does not always follow federal regulations for notifying taxpayers’ representatives while filing of lien notices.
Archive for the ‘Tax Collection’ Category
IRS Failed To Properly Protect Taxpayers While Assessing Tax Liens
Tuesday, October 18th, 2011IRS Collection Process: Offers in Compromise
Wednesday, October 12th, 2011Listen to an audio transcript of an IRS Enrolled Agent explaining the process of filing an offer in compromise, and who may file for an OIC.
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Tax Deductions Many People Miss on their Tax Returns
Saturday, September 24th, 2011Deductions are the best part of filing taxes, and most people are missing out on them, sending more money to the federal government than required. But before I review some of the deductions people miss on their tax returns let me make a quick suggestion on how to stay away from an IRS Audit.
- Don’t file fictitious or exaggerated deductions
- Be aware that submitting higher than average deductions in frequently abused areas like automobile deductions could create an audit flag with the IRS. The cautious route for deductions is to keep this advice in mind: If in doubt, leave it out!
- NEVER send anyone your original receipts. They get lost by CPA’s Tax Preparers, Tax Attorney’s and the IRS. Keep your original receipts and send copies. This is the eighteen years of experience talking.
Now’s let’s look at some great deductions you may qualify for.
Tax Protesters – It Doesn’t Work
Monday, June 13th, 2011
Many people feel like they pay more than their fair share in federal income taxes, but it is important to correctly file your taxes on time and pay the amount you owe the IRS to avoid tax problems. As a Tax Attorney I deal with tax protest cases on a fairly regular basis.
Here’s the thing, this defense against paying taxes doesn’t work. It didn’t work for actor Wesley Snipes and it hasn’t worked for the most dedicated of tax protestors over the years, despite being tested in our courts since the 1950′s.
Back in 2006, USA Today pubished an article on tax protestors that they interviewed me for, and subsequently quoted me in as a tax expert. Here’s an excerpt of the story to illustrate a fairly common tax protestor scenario:
“SOUTH BEND, Ind. — Like most Americans, Peter Smith and his wife, Ellyn Stecker, sit down each year to fill out a federal tax form. Then they write a check to the U.S. Treasury for half the sum in the “amount you owe” box.
They are among thousands of Americans who refuse to pay part or all of their federal taxes as a protest against war and military spending. “It takes two things to fight a war: people and money,” says Smith, 67, a retired math and computer science teacher. “I can’t refuse anymore to go, but I certainly can refuse to send the money.”
No one likes to pay taxes, but in the long run when you protest your taxes by not paying the IRS (regardless of the reason) the Federal Government ends up with its share or you end up in trouble.
I’ll sum up this post today by reprinting my quote from the USA Today Article:
“Jeff Fouts, a tax attorney in the Atlanta area, says, “No matter what argument you raise as to the legitimacy of the tax system, you’re going to lose.” – USA Today War on Tax Waged Against Costs of War
Save your protest for a sharply worded letter to your elected officials, or one of many other forms of protected avenues of protest we enjoy in America such as free speech. It has a lot more chance of helping achieve your ends with none of the dire consequences.
Until next time,
Jeffrey I. Fouts, Tax Attorney
You can put off your tax problem, or put us to work.
Here’s a bio of sorts. I’m happily married with two kids. I’m a real small town tax lawyer (Ellijay, pop. 1,584) not some fictional marketing character. I represent tax payers before the IRS in all 50 states. I have 18 years experience, thousands of satisfied clients, about 8 critics at last count, and an A+ BBB Rating.
I’m a member in good standing of the bar and have active memberships in courts from Georgia to Washington D.C. My competitors covet my Google ranking but my clients covet my sound counsel. I deal directly with my clients and have a small, tireless staff. You can put off your tax problem, or put us to work.
Innocent Spouse Relief Resources
Tuesday, June 7th, 2011
Women are the most common victims of tax fraud committed by their spouse. Many don't know they can file with the IRS for 'innocent spouse' relief.
If your current or ex-spouse owes money to the IRS and you filed a joint return you may need innocent spouse tax relief. Innocent spouses need to know how to fight back against the IRS. This post will give you an example of innocent spouse relief and five resources to help you save yourself.
You know something is wrong with our system when an innocent spouse is saddled with a crushing tax debt created by an ex-husband without her knowledge while white collar criminals associated with our banking crisis live like kings.
Some 50,000 tax payers file for innocent spouse relief each year with the IRS but there are many more victims that either don’t know about their rights or file after the IRS’s two year deadline. But relief may be on the way in the summer of 2011 as the IRS is reviewing innocent spouse relief after pressure from congress.
Here’s an example of tax fraud committed by a husband that injured his innocent wife as reported recently by Laura Saunders in the Wall Street Journal – A New Push to Protect Spouses.
“In 1999, Cathy Marie Lantz’s husband, Indiana dentist Richard Chentnik, earned $112,000—or so she thought when she signed their joint tax return. In 2000, Dr. Chentnik was arrested for Medicare fraud, convicted and imprisoned. In connection with the case, the Internal Revenue Service sent the couple a bill for $900,000 of tax, penalties and interest.
Does Ms. Lantz owe the tax debt her husband incurred? The IRS said yes, the Tax Court said no, and last summer the Seventh Circuit Court of Appeals said yes again, siding with the IRS.
The court’s reasoning: To be absolved of responsibility for the couple’s tax debts, Ms. Lantz would have had to ask the IRS for “innocent spouse” relief within two years of the agency’s sending a levy notice.
According to testimony, she said she didn’t do so because her husband told her he had taken care of the request. Dr. Chentnik did get the IRS form, according to testimony, but didn’t file it before dying in a halfway house in 2004—so the court held Ms. Lantz liable for the entire tax bill. ” – Wall Street Journal
IRS Innocent Spouse Relief Resources
- IRS.gov section on Innocent Spouse Relief » Visit
- File IRS Form 8857 (download here) – You must show the tax was due to your spouse and that you didn’t know of any problem
- My own short and simple overview of your innocent spouse relief options
- Tax articles and Podcasts from Tax Mama on Innocent Spouse Relief » Visit
- For someone who wants to perform deep research you can buy the guide from the American Bar Association intended for practitioner Attorney’s like me that walks through the entire innocent spouse relief process (cost is about $100). A Practitioner’s Guide to Innocent Spouse Relief:
Until next time,
Jeffrey I. Fouts, Tax Attorney
Here’s a bio of sorts. I’m happily married with two kids. I’m a real small town tax lawyer (Ellijay, pop. 1,584) not some fictional marketing character. I represent tax payers before the IRS in all 50 states. I have 18 years experience, thousands of satisfied clients, about 8 critics at last count, and an A+ BBB Rating.
I’m a member in good standing of the bar and have active memberships in courts from Georgia to Washington D.C. My competitors covet my Google ranking but my clients covet my sound counsel. I deal directly with my clients and have a small, tireless staff. You can put off your tax problem, or put us to work.
How the Rich Pay No Income Taxes
Tuesday, April 12th, 2011
Ever wonder how wealthy people pay so few in income taxes? Here are some ways that wealthy individuals lower, or in some cases eliminate their federal tax bills.
The true effective rate for the super wealthy is actually much lower than that indicated by official statistics. Those figures fail to include the additional income generated by many sophisticated tax-avoidance strategies used by high net worth individuals.
Using tax deferred strategies such as purchasing large community properties, paying yourself in dividends, or claiming deferred income can save multi-millionaires huge sums of money, and allow them to continue to accumulate massive riches.
Be careful when using sophisticated tax reduction strategies, as the IRS can come after you for unpaid taxes if you improperly claim deductions and tax breaks..
full article in BusinessWeek magazine.
Top Sources of Tax Problems That Lead to Hiring a Tax Attorney – Part 2
Thursday, March 31st, 2011
Low cost tax preparation services might be more trouble than their worth
Yesterday, I talked about one of the biggest sources of tax problems that lead individuals and businesses to hire me to represent them as their tax attorney before the IRS. If you are coming here new, please read my previous post about the ‘gotchas’ that can occur with tax software.
Today, I want to talk about the next biggest source of tax problems that my clients experience and then give you 5 ways to avoid tax problems when working with a tax preparer.
Low Price Tax Preparation Services
You know the old saying “If I had a nickel for every time a _________ I’d be rich!”?
Well, I’m not rich but I have built a successful tax law practice over 19 years because of the number of people who have been burned by low cost tax services. With apologies for my dry humor, in my practice these firms rank almost neck and neck with tax preparation software as my highest performing sales channel!
So why do so many tax problems stem from low cost tax services? (more…)
Little Known Tax Facts That Govern Us Every April 15
Monday, February 28th, 2011Well, a new tax filing season is upon us. Off we go about the burdensome business of gathering our receipts, W2s and 1099s, contributions, interest paid and received, deductions, bank statements, and everything else we need to figure our tax forms or give to an accountant or tax preparer for assistance. Rarely do we stop to consider why or when the whole process began. Or why the dreaded deadline is set to April 15. Or a myriad of other facts pertaining to the yearly task, of which has been said; “The only thing certain in life is death and taxes”.
Interesting facts about taxes, income tax and the IRS:
1. Firstly, where did the expression about the unavoidability of taxes originate?
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IRS Taps Into iPhone Apps To Speed Up Refunds
Thursday, February 24th, 2011It used to be a sad fact that the IRS had a horribly old computer system. There was a justifiable fear that all their data would be corrupted or simply lost, which wouldn’t be good news for anyone.
Over the last decade Congress has thrown millions and millions, and more millions, of dollars at the IRS’ dire computer problem in an effort to modernize the aging system. They even created a special computer system to tax Bill Gates. Over the last few years there has been real evidence that the IRS has finally entered the modern computer age and online world.
The IRS is embracing social media and technology to help taxpayers file faster and get tax refunds quicker.
Electronics is helping and revamping taxpayers with the Irs2go app for smartphones including the iPhone and Android.
The Irs2go is just one of the conveniences of the modernized electronic filing, giving taxpayers refund status and tax tips with a tap.
Tax tips will be available on your phone, saving you from having to talk with a tax preparer or do research online. The IRS apps will provide a single source of searchable solutions.
By using Irs2go, instead of the IRS following you, you can follow the IRS in their processing of your tax return, a more advanced form of electronic filing.
The biggest benefit most people will appreciate is less waiting for your tax refund.
The online system that the IRS is working on now will replace their old legacy system which had a couple of weeks delay to receive your money. Tax refunds are now being processed in three days with just the new system.
The Irs2go app is just one piece of modernizing the electronic filing process that will move taxpayers beyond traditional paper tax filing channels.
P.S. While this is great news if you’re wanting to get your refund faster, it’s terrible news if you owe the IRS back tax debt. All this sophisticated mobile computing power also allows the IRS to cross check many different required tax filing items and to find you quicker. It also allows them to better find sources of income or assets to potentially garnish and seize. That’s where I and my law firm can help.
Until next time,
Jeff Fouts
Is The Top Income Earner’s Share of Federal Income Tax Burden Fair?
Thursday, January 20th, 2011
Total Income Tax
The latest Internal Revenue Service data on individual income taxes, which includes up to calendar year 2008, was released recently and the Tax Foundation compilled some interesting facts from it.
It found that 2008 was “a year of economic recession in which the world’s financial system was temporarily in a perilous state.” It was also a year in which the amount of individual income taxes paid fell by $84 billion.
Because there was less income generated, the distribution of the tax burden has been a bone of contention in the media. The average income tax rates in 2008 were at their lowest levels since 2004. It has been suggested that the higher end of the income scale have not been paying their fair share, and the income gap has been growing.
While the top 1% of taxpayers declined in their percentage of the total adjusted gross income, there portion of paid taxes also fell. “Each year from 2005 to 2007, the top 1 percent’s constantly growing share of income earned and taxes paid set a record. That trend reversed in 2008. In fact, the income share for the top 1 percent of tax returns was lower in 2008 than in 2000, largely due to differences in capital gains.”
In 2007, the top 1 percent paid more federal income tax than the bottom 95 percent. But during 2008 that was no longer the case. None the less, the top 1 percent still paid 38 percent of all federal income taxes combined. (While the bottom 95 percent paid 41.3%)
And to put a finer point on the numbers in this equation, the bottom 95% in 2008 have an adjusted gross income of under $159K, while the top 1% is over $380K. The top 1% in 2007 was more than $410K.
“Overall, these data on high-income tax returns appear to confirm that the recent recession had the same diminishing effect on income inequality that most recessions have, and that it occurred for the same reason, a sharp decline in income at the high end.” This suggests that this recession has NOT increased income inequality, as has been reported in some media outlets.
In pure dollar amounts for the last three years that official data is available, the top 1% paid $392 Billion in 2008, $451 Billion in 2007, and $408 Billion in 2006. See the accompanying chart for further details (Tax Foundation Fiscal Fact, No. 249. Table 4. October 6, 2010). It can be seen that since 1987 the amount of tax paid by the top 1 percent has gone from $92 Billion to well over $400 Billion — which represents a percentage of the total combined income taxes paid of just under 25% in 1987, to a high of more than 40% recently. In that same time frame, the percentage adjusted gross income of the top 1% in comparison to the total has gone from 12 to 20 percent. An 8 point increase in raw income reporting, in comparison to a 15 point increase in the total burden of tax payments.
Based on the IRS’s own data, it objectively appears that higher income earners are paying more than their share of the IRS tax burden.
Until next time,
Jeff Fouts
Read the full summary of the latest Federal individual
income tax data PDF report.
