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Tax Attorney Mary King Resolves Serious IRS Tax Problems

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Tax Laws and Politics

The Mortgage Forgiveness Debt Relief Act And Debt Cancellation

Overview

For many people, their homes are their largest and most expensive asset. In addition, for many people in the middle class their net worth is mostly tied up in the equity of their home. There are many people that have had issues with their homes over the past couple of years, however. When the housing market crash in 2007 and 2008, many people found themselves under water on their mortgages where they owed more than the home was worth. In general, when anyone is removed of their obligation on paying back a debt that amount is taxable. For example, if someone owed another person $1,000 and that was cancelled, that $1,000 would be taxable. If a person was in the 20% tax bracket, they would owe $200 on the $1,000 that was cancelled. The good news for home owners that find themselves in a bad situation on a home is that mortgage debt is generally tax exempt.

Debt Cancellation

Whenever money is borrowed through legal means, a person has the responsibility to pay that debt back. However, due to a variety of circumstances people have to default on their debts all of the time. If a lender cancels a debt that is owed, the balance on that debt can be taxable.

There are some exceptions to this rule, but by in large a person must pay taxes on the difference.

Many people do not understand tax law in detail and this can be confusing. Here is a good example that happens often:

A person... ...read full post


IRS Quashes Rumors Of Delayed Tax Deadlines - Adds To Apprehension Of 2015 Tax Season

The Specter

There was speculation after Congress passed a tax-extender bill in late December 2014 near the end of its session that in combination with budgetary cutbacks the legislation might delay taxpayer filings and Internal Revenue Service (IRS) processing. In a December 18 press conference, IRS Commissioner John Koskinen warned that congressional budget cuts might delay taxpayer refunds because fewer than the normal number of IRS agents would be available to audit returns and to assist taxpayers calling in with questions.

On December 29, 2014, the IRS said that it anticipated opening of the 2015 tax filing season as normally scheduled on January 20, 2015, when the agency would begin processing electronic and paper tax returns as usual. Commissioner Koskinen said that the tax extender legislation enacted ten days earlier on December 19 had had no effect so far on the continued updating and testing of IRS systems.

The Apprehensions

But by early January, two weeks before the start of the tax filing season, taxpayers were apprehensive. They braced for a season of misery. Commissioner Koskinen had advised agency employees that the budget revisions would reduce the scope of taxpayer services and that "realistically [IRS agents] would have no choice but to do less with less." This warning made taxpayers wonder whether

Identity theft could increase. Despite the need for more taxpayer protection, implementation of new security measures may be delayed, bad news for taxpayers since thieves have grown bolder. Telephone scammers posing as IRS agents stole more than $5 million from taxpayers in 2014.

There... ...read full post


Despite Defunding, No Delays For Tax Deadlines For 2015

The rumor mill was abuzz, but alas, it was all just rumor. The Internal Revenue Service will not be issuing an emergency tax deadline extension in 2015, although there was talk of a possibility earlier in the year. The IRS announced in December 2014 that it would begin accepting tax returns on January 20, 2015 and anticipated no delays in tax returns this year. While the budget cuts to the Internal Revenue Service operating budget were fueling the possibility of delayed returns, the federal government said that everything was on running on time to begin processing tax filings.

The result of this adaptability by the revenue agency means that there will be no tax deadline extension this year. However, those who have not prepared their taxes as of now are eligible for an extension as long as they request it by midnight April 15. 2015. which is a hard deadline in most tax filing seasons. It will be the same this year, regardless of the deadline extension anticipation. While the interest on the extended taxes owed will only be 5%, that is not the case with the penalty for a late filing. The penalty can be upwards to 25% and is due by October of this year. This can amount to a significant amount of money for those in the upper income tax bracket, so paying on time and being prepared early is crucial for some individuals.

Businesses do not always get held to the same standard as individual tax payers, including... ...read full post


IRS To Require Obamacare Health Insurance Exchanges To Turn Over Data For Tax Purposes

With the controversial law now under way after a shaky start, the internal revenue service is requiring that information recorded at the Obamacare online exchanges be provided to the IRS.

The IRS claims that they need this information to determine who is really eligible to receive the healthcare subsidies. The new rule will allow the IRS to collect personal information  including names, addresses, taxpayer ids, premium amounts, insurance carriers, and policy numbers.

The new rule comes at a time when cases of IRS-related identity theft are at an all-time high and has law makers concerned with privacy and the potential for errors by the IRS.

Several bills filed by Republicans sought to amend the new rule to reduce the amount of data collection available to the IRS however, the new bills were never taken up by the Senate and the current rule stands. The IRS states as a reason that the income verification used by the healthcare exchanges is the most recent two years of filed tax returns.

However given that the initial start of the healthcare exchanges was in many cases over a defective website, it could be anyone's guess what information the IRS will actually be getting and if it is accurate  or not.

For many the premiums in exchanges are only affordable because of the tax credits involved – should the IRS determine true or not that the policy-holder is not really qualified they could not only find themselves with a premium they cannot afford anymore.

For those looking to get the tax... ...read full post


Government Shutdown Closes IRS Offices But Your Tax Debts Are Still Open For Business

For those who are facing large amounts of tax debts and view the shutdown of the federal government as a temporary relief – think again.

If anything, the shutdown will have the effect of making it far more difficult to resolve any IRS problems because virtually all debt negotiations are off until things go back to normal. However, portions of the IRS are still hard at work, processing returns or taking note of the lack there of.

It's worse if you, or your tax attorney, are in the midst of negotiating with the IRS because during the shutdown there will be no one to negotiate with. The IRS office closing however will not get you off the hook for making scheduled payments and the clock is still ticking on any other time-sensitive.

For anyone with questions or seeking help will also be out of luck, as customer service over the phone or in person will not be available congress gets it's act together.

Needless to say the shutdown will be a major in convenience for law firms who help resolve tax problems, as any progress on the IRS's end will be delayed for an unknowable amount of time.

What should someone with large amounts of tax debts or repayment plans take away from this?

Basically if you are on the hook for tax debts or other IRS problems the shutdown will not get you off the hook.

  • Payments already schedule as part of an installment agreement or offer in compromise must continue to be... ...read full post


How The New Healthcare Law Will Affect You And Your Taxes

The new healthcare law which was just affirmed by the Supreme Court, officially titled the Patient Protection and Affordable Care Act (“the Act”), has a number of consequences beyond just medical reform. Specifically, the law is full of new taxes and tax increases that will affect individuals and businesses alike. However, many of these taxes will take years to take effect.

First, starting in 2012, the value of health care benefits that employers provide to employees must be reported on W-2s. The amount reported is not considered income.

Second, in 2011, the penalty for nonqualified distributions from health savings accounts was doubled to 20%.

Third, employees are now limited in the amount that they can contribute to health care flexible spending accounts. This was previously a discretionary amount; now it is capped at $2500.

Fourth, beginning in 2013 the itemized deduction limit for medical expenses will increase from 7.5% to 10%.

Finally, individuals who do not procure their own health insurance by 2014 will be taxed. This tax will be phased in over three years starting at the greater of $95 or 1% of income and rising to the greater of $695 or 2.5% of income in 2016.

If you owe back taxes to the IRS and have questions about how the new Healthcare Law will affect your tax situation contact Florida Tax Attorney Mary King 941.906.7585... ...read full post


The Evidence Is Now Out There. Congressman Hints At Additional Taxes To Reduce Deficit

It is expected that the IRS will be more thorough in reviewing tax returns this year. It’s been rumored that tax increases will be necessary to reduce the budget deficit, but now Washington leaders are coming out and saying it.

Rep. Steny Hoyer(D-MD) said at the first of this month that increasing taxes to reduce the budget may be, “the only solution.” Hoyer also said a balanced approach is needed that “raises some revenue.”

As a result, American taxpayers will be expected to fork out more of what they earn, both during the years of the current recession and when it comes to filing their annual returns for years to come.

The Internal Revenue Service (IRS) will be even more aggressive in checking to make sure the United States Government gets every penny owed to it. The increased diligence that the IRS will employ in reviewing returns means that taxpayers will have to assure they are knowledgeable about the money that may be owed to the government.

That’s why consulting with a IRS tax attorney is important when preparing returns and in the event that taxpayers are audited to avoid costly IRS tax problems.

April 20, 2010 by Mary E King Florida Tax Attorney... ...read full post


No More Refund Anticipation Loans

No More Refund Anticipation Loans IRS Wipes Out the “Quickie Tax Loan” Business with New Ruling


IRS Spokesman David Stell declared that the agency shall no longer release “debt indicators” of taxpayers to tax preparation services.

Debt indicators released by the IRS are those that indicate whether the taxpayer will receive any tax refund, and if that refund would be offset by payment of delinquent taxes, student loans or child support. Tax preparers and payday loans companies use this information to process Refund Anticipation Loan (RAL) or RAC (Refund Anticipation Checks).

The usual target market for the loans are taxpayers in the lower-income bracket. Tax preparers take advantage of these individual’s need to get hold of cash quickly to process such loans. Both refund anticipation loans and refund anticipation checks are being used by taxpayers so that instead of having out-of-pocket payments, the tax preparation fees and products are paid for. The target of such loans and checks are those who have no cash-at-hand to pay for services done under tax preparation.

However, according to IRS Commissioner Doug Shulman, the reason behind the non-release of debt indicators in the next tax filing season is that tax returns and refunds can now be processed in just 10 days. Because the processing has become faster, taxpayers are instead ... ...read full post


CAN I GO TO PRISON FOR FAILING TO FILE OR PAY MY TAXES?

I hear varieties of this question frequently in my office. In this week’s blog, I have taken two examples from newspaper articles of examples of individuals who violated different sections of the tax code and unfortunately ended up in prison.

Former Wisconsin Restaurant Owner Receives Prison
Term for Evading Income Taxes

On February 27, 2008, in Madison, Wis., Sabi Atteyih was sentenced to 12 months plus one day in prison, to be followed by a three year term of supervised release for income tax evasion. On January 2, 2008, Atteyih pleaded guilty to evading his income taxes for 2002. While owning the Casbah Restaurant in Madison, Atteyih underreported his taxable income from the restaurant from 2002 through 2005 by $349,673 and he evaded income taxes totaling $128,938.

Minnesota Woman Sentenced for Failing to Pay Employment Taxes
On April 20, 2009, in St. Paul, Minn., Kara Kristine Sommer, of Burnsville, Minn., was sentenced to 18 months in prison and three years of supervised release for failing to pay the Internal Revenue Service (IRS) payroll taxes from employees of a construction business. According to her plea agreement, Sommer admitted withholding or causing to be withheld amounts for federal income taxes and Federal Insurance Contributions Act (FICA) taxes from the wages of employees of Frontier Construction, Inc., located in... ...read full post


Even Millionaires Collected Unemployment Benefits Last Year

IRS Releases Data That Shows Nearly 3000 Millionaires Collected Unemployment In 2008


millionaires claim unemployment in 2008The IRS has recently released data concerning unemployment insurance claims in 2008 and the data revealed that benefits were collected by nearly 3000 individuals who are considered millionaires. Of those 3000, 806 made over 2 million and 17 made over 10 million.

How is this possible you may ask? The fact is, unemployment is an insurance program that employers contribute to, it is not a welfare program based on need.

So, regardless of your income level, if you have lost your job and your employer paid insurance benefits, you are entitled to make a claim.

It is hard to think that a person making 10 million dollars a year would bother with a $300 a week check, but every penny counts when you are unemployed.

While this may seem outrageous, these numbers are really nothing compared to the actual number of people that filed for unemployment insurance in 2008. The actual number released from the IRS has shown that a total of 9.5 million individuals made claims during the year; an astounding figure.

These numbers are much higher than those in 2007. The IRS even refused to publish the amount of millionaires filling for claims in 2007 because the number was so low that... ...read full post






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