TAX CREDIT

SOUTH CAROLINA DEPARTMENT OF REVENUE
COLLEGE TUITION TAX CREDIT
To help ease the financial burden for South Carolina
college students and their families, the South Carolina
General Assembly has created an income tax credit for
tuition paid to South Carolina colleges and universities.
The following information should answer most of your
questions about the tax credit.
Who can claim the credit?
The student, parents, guardian or whomever actually
pays the tuition and claims the student as a dependent
on their tax return may claim the credit. If the parent and
student split the cost of the tuition, they also may split the
credit on the tax return. However, the combined credit
claimed by the parent and student may not exceed the
maximum amount of the credit. Parents or guardians
with more than one student in college may claim a credit
for each qualifying student.
Who qualifies for the credit?
􀀹 Students must have completed their high school
education in May 1997 or afterwards.
􀀹 Students must have graduated from a South
Carolina high school or home school program in
South Carolina. Students may also qualify if they
graduated from an out-of-state prep school as long
as the parent or guardian remained a South
Carolina resident.
􀀹 Students must qualify for in-state tuition
􀀹 Students must compete at least 30 credit hours by
the end of the tax year in which the credit is
claimed
􀀹 Students must be enrolled in an undergraduate
degree program or at a one-year undergraduate
certificate or diploma program.
􀀹 Students cannot have been convicted or pled
guilty or no contest to any felonies or alcohol or
drug crimes in any state. (This does not apply if
the criminal record has been expunged.)
􀀹 Students cannot be in default on any student
loans.
􀀹 Students may not claim the credit if they are
recipients of the LIFE Scholarship or the Palmetto
Fellowship. If the student loses the scholarship, a
tax credit may be claimed for the time remaining in
the four-year credit period if the student otherwise
qualifies.
􀀹 Students must be in good standing at the school.

FREE HELP WITH TAX RETURNS

notice free tax help.doc
Tax counseling and preparation help is available under the sponsorship of the American
Association of Retired Persons (AARP), in cooperation with the Internal Revenue Service
(IRS). Tax-Aide tax counseling is a free service provided by volunteers who have been
trained in tax counseling and who provide their services free to those who are eligible
under the program. This service is not limited to senior citizens. Services for the 2008 Tax
Year will be available from February 1, 2009 through April 15, 2009.
Site locations and times in Northern Kentucky are as follows:
COUNTY LOCATION DAY and TIMES
BOONE BOONE COUNTY LIBRARY FRIDAY
1786 Burlington Pike 9:00 am – 1:00 pm
BURLINGTON, KY 41005
CAMPBELL FIRST PRESBYTERIAN CHURCH THURSDAY
220 S. Ft. Thomas Ave 9:00 am – 1:00 pm
FT. THOMAS, KY 41075
CAMPBELL NEWPORT PUBLIC LIBRARY TUESDAY
901 E. Sixth Street 10:00 am – 2:00 pm
NEWPORT, KY 41076
KENTON KENTON COUNTY LIBRARY WEDNESDAY
5TH & SCOTT ST 9:00 am – 1:00 pm
COVINGTON, KY 41011
KENTON ERLANGER CHRISTIAN CHURCH SATURDAY
27 Graves 9:00 am – 1:00 pm
ERLANGER, KY 41018
PENDLETON PENDLETON COUNTY LIBRARY MONDAY
228 Main St 3:00 pm – 7:00 pm
FALMOUTH, KY 41040
GRANT WILLIAMSTOWN SENIOR CENTER SATURDAY
400 N Main St (behind firehouse) 9:00 am – 1:00 pm
Williamstown, KY 41097
Please bring the following with you when you come: Copies of your last year (2007)
Federal and KY income tax returns, Social Security cards for self and all dependents, W-2
forms from each employer, unemployment compensation statements, SSA-1099 if you
received Social Security benefits, all 1099 forms showing dividends and interest, 1099-R
form if you received pension or annuity, 1099-misc showing any miscellaneous income,
bring documentation showing selling price and original purchase price for any assets sold,
all forms indicating federal and state income tax paid, dependent care provider
information, all receipts or canceled checks if itemizing deductions.

Filling Your State Tax Forms

The taxes imposed by the States are called State taxes. State forms are used by individuals and companies to file the income earned during a year to the state revenue department. They differ for various states and so do the numerous forms required to file the returns. Most of the states impose state taxes on their residents and those that do not impose individual income tax have corporate income tax. People residing in these states have to file state income tax also, in addition to the federal income tax. The states that impose neither income tax nor corporate income tax have high sales tax.

They could be obtained from the post offices, libraries or schools. It could be downloaded from the Revenue site of the respective states.

The filling of state tax forms can be very simple in some cases and could be complex in certain other cases depending on the type of income they earn. If wages or salary is your only source of income, then it requires you to fill in very few details. If you have income from pensions, real estate, stock market transactions etc, then you will have to submit supplementary forms and worksheets and this could be very long.

If the federal tax is already filed, then you can refer to that and fill in some of the details of your state tax forms. There are certain exemptions, deductions and tax situations that are specific to each state. If you are filling the forms in yourself you should be aware of these, otherwise you will end up paying more taxes than is necessary. State taxes could be counted as deductions in the federal tax and if the state taxes are not calculated properly, this will have an impact on the federal tax.

Those who are not familiar with tax forms may use income tax software to fill in the details. This software requires you to fill in the details from your W2 tax forms, 1099 and other supporting documents. If these details are entered, the software will do the calculations and the right figures will be entered at the corresponding slots. While filing the state tax forms, the software imports the details already filled; you will be asked to fill in the details specific to the particular state.

Filing IRS form 1040 properly is essential to file the state forms as most of the details for them are imported from 1040.

The Flat Tax Proposal

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The Flat Tax Proposal
Consider what government is all about. It can be summed up in one word: Taxes. Regardless of location, party denomination or political structure, just as an army reputedly "travels on its stomach," a bureaucracy travels on its citizens' billfolds, and everyone entering government service sooner or later comes to share this attitude. Left to the devices of the officials, there is no limit to the amount collected, and any attempt by the payors to minimize the tribute will be met with warnings of dire consequences that never end. In California, home of the famous (or infamous) Proposition 13, the initiative measure which in 1978 cut property taxes by half and limited future increases to 2 percent per year, tax beneficiaries to this day blame every malady except the sinking of the Titanic on the passage of that proposition. The fact that the state and all its political subdivisions are literally awash in money does not dampen the enthusiasm of many to rescind that law.

As the intent of the collectors to shear the public is clear, so is the attitude of the shorn. It requires no great awareness to understand that your money is taken. For this reason, the politicians must regularly genuflect to the concept of tax relief, and an endless variety of proposals are periodically floated to convince the citizens that their best interests are uppermost in the minds of their leaders. Think back, if you will, to the spectacle of political candidates falling all over themselves with conflicting tax reduction plans prior to the 2000 national elections. The called-for relief stressed the conventional palliatives including marital deduction reform, capital gains revision, and general rate reduction. As predictable, the sound and fury following the election came to mostly nothing, short of ballyhoo over how each citizen might best spend a $300 per head governmental gift.

One of the more fascinating suggestions that surfaces from time to time is the idea of a "flat tax." As the concept is actually taken seriously, it is worth discussing. Income tax in the United States is assessed and collected in what are known as "brackets," of which five presently exist for the average taxpayer. As a person's annual taxable income rises, the rate at which it is taxed increases with each higher bracket. A tax system with a wide percentage variance between the lowest and highest brackets is referred to as progressive. The proponents believe it fair that those with the larger incomes pay a greater percentage of that income in taxes. However, it is by the granting of various exclusions, exemptions, deductions, and credits that taxation of income takes on its true character, and it is through the use of these devices that the effective rates are distorted into a bewildering array of meaninglessness.

This brings us now to the flat tax, which, at its simplest, is the taxing of all income from whatever source, with no exemptions or exclusions, at a single rate. This concept is propounded from time to time by various political candidates in the hope that its simplistic approach will somehow capture the hearts and imaginations of the beleaguered tax-paying voters. Its supporters include representatives of both major parties, where variations on the specific details are introduced in order to satisfy one or another special interest group. Though popularized by Republican Stephen Forbes in both his 1996 and 2000 presidential bids, a decade earlier Oakland Mayor Edmund G. (Jerry) Brown, Jr., a former Democratic governor of California, championed it with an equal lack of success. Over the years the flat tax concept has remained a durable issue for those candidates utilizing the Christopher Columbus approach to electioneering: just discover an issue and land on it.

My objection to the flat tax is its offer of tax simplification. For the taxpayer willing to understand and utilize the system, complexity is desirable, and the more, the better. Complexity, by its very nature, creates opportunities for creativeness--"loopholes," if you prefer. It also complicates the tax collector's ability, sometimes to the point that the entire process bogs down in a mass of self-contradictory rules and procedures. Ease of administration of a tax system normally results in maximum revenue to the collector, whereas complexity works in the taxpayer's interest. It is my belief that the sole hope for the citizen is a perpetuation of the presently existing labyrinth of tax laws. Only a system that provides an element of indecipherability will allow the knowledgeable taxpayer some maneuvering room.

A Little Tax Planning

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A Little Tax Planning
Seated here with my niece Pauline at The Fish Market in Irvine, California, one of my favorite restaurants, certainly ends the week on a high note. While waiting for the Manhattan clam chowder, Pauline is bringing me up to date on her family. " . . . so Barbara is starting her senior year at high school and Randy will be a sophomore. It’s hard to realize, Uncle Al, that Jim and I will be celebrating our twentieth anniversary in just a few months."

"It’s sort of unreal to me too," I said. "It seems as though I attended your wedding only a few years ago, and Jim had just started with Barnes and Standard in the shipping department. Tell me, how are things going for him now?"

"Couldn’t be better. He received another promotion last month—he’s assistant to the plant manager now."

"Why, that’s great. It’s a fine fellow you’ve got. Oh, and by the way, how is that little antique business you started up a few years ago. Is it finally showing some signs of life?"

"Yes, it is . . . at last. I’m working with a woman that does furniture restoring, and that’s breathed some life into things. I’ve developed several sources for locating fine old pieces, and I’m starting to build a base of repeat clients. The fact is, I made almost forty thousand dollars last year and as things are going, it should be fifty this year."

"Um, that’s wonderful . . . " I remarked, but as the words came out, several discomforting thoughts came to mind. After a few moments, I leaned a little closer across the table and said: "Pauline, do you mind if I ask you a few specific questions about your business?"

"Why, not at all, Uncle Al. What do you want to know?"

"Well, first off, what form of business entity do you use?"

"I’m not sure what you mean," she said.

"Well, did you organize as a partnership, or perhaps an S corp, or simply as a sole proprietor?"

"Eh, that last one, I guess. I just filed a business notice in the name Pauline’s Antiques."

"That’s what I thought, which means your accountant lists income and expense as part of your and Jim’s 1040 tax return on a Schedule C."

"Yes, that’s right. Is that good or bad?"

Pushing the now empty clam chowder bowl to the side, I reached for a slice of The Fish Market’s exquisite sourdough bread. "Well, I’ll give you the facts and then you can decide whether it’s good or bad—but first I have to ask a personal question."

"Anything," she said.

"How much is Jim’s salary now at Barnes and Standard?"

"He’s getting sixty-five thousand a year."

As I leaned back in my chair once again, I mentally added numbers as the picture came into clear focus. Then peering directly at Pauline, I said: "Here’s the way it is: Though you may make fifty thousand this year, you’ll only get to keep about half of it."

I watched as a look of disbelief formed on the face in front of me. "What do you mean that I’ll only get to keep half of it?" she exclaimed.

"Here’s the way it works," I said. "With the joint return that you and Jim file, your income is simply added on to the top of your federal tax bracket, which is 25 percent up to about $115,000, and goes to 28 percent above that. You can then add on another 9.3 percent for California tax. Finally, every dime you make will have an additional 15.3 percent for FICA tax—that’s your contribution to the Social Security system. All together, almost 50 percent comes right off the top. You’ll get to keep maybe $25,000. Now you tell me, is it good or bad?"

"It’s terrible! How can they do such a thing?"

"That’s something that would take me about six hours to explain," I said, as the waitress arrived with two luscious orders of rainbow trout."

Pauline grimaced. "I think I’ve lost my appetite,"

I smiled slightly as I said: "Maybe things aren’t all that bad. There’s another way to skin this cat, if you’d like to hear about it."

"Anything."

"It’s fairly simple. You run your business as a corporation instead of as a sole proprietorship."

"How does that change things?"

"I’ll explain. To begin with, federal corporate income tax on the first $50,000 is 15 percent. In the second place, income to the corporation that’s not passed on as salaries is exempt from the FICA tax. And even the state helps a little with a slightly lower corporate rate of 8.84 percent. So these three items will represent a savings to you of almost $13,000. Now, does that strike you a little better?"

"Uncle Al, your suggestion certainly sounds reasonable. But just one thing: what are the drawbacks?"

"Pauline, you’re starting to ask the right questions. Yeah, there are a few things to consider. Most important, do you have to draw out any of your profits for living expenses, or can you, Jim, and the kids get by on his salary?"

"We do just fine on that. I don’t need to dip into any of the business income."

"Good, then you can pull it off. It means that the corporate profit will remain as undisbursed assets. There is, however, one complication that you’ll eventually have to face, but it’s manageable."

"And what’s that?"

"It’s something called accumulated earnings surtax, which is 15 percent collected on top of normal corporate income tax. You see, the IRS doesn’t like corporations to hoard earnings. That interferes with the double taxation they understandably find to their liking. Fortunately, however, there’s some leeway. An accumulated earnings credit of $250,000 prevents assessment of the tax until the aggregation reaches that amount. That’ll give ample time to arrange things; I’ll help you with that when the time comes. In the meanwhile, with the services of a law firm I can recommend, together with your accountant’s help, you can be set up and functioning in no time at all."

"Uncle Al, you’re a lifesaver. I’ll get on it right away. I certainly feel better."

"Pauline, it’s a pleasure. Now, is there anything else I can do?"

"Yes there is," she said, with a broad grin. "Pass the tartar sauce . . . my appetite’s come back.".

Settle Tax Debt and IRS Problems

Whether the IRS is demanding full payment of back taxes up-front or a payment plan that is substantially higher than what you can afford to pay, we can negotiate an offer in compromise settlement on your behalf for a fraction of what is owed or to set up an arrangement for the lowest possible monthly payment with various options for making those payments, if you qualify.

Don't be afraid of the IRS anymore. We have a 99.7% client satisfaction rate from clients who have permanently resolved their back taxes and IRS problems. Get tax relief fast from the nation's leading expert in resolving back taxes and IRS problems.

Even if you can't afford to pay your back taxes, a Certified Tax Resolution Specialist, tax attorney or CPA, can give you the help you need to settle your IRS debt.

If you owe back taxes or if you've been threatened with an IRS levy, lien, seizure or the denial or termination of an installment agreement, let us represent you and put end to your IRS problems! We can help you file an IRS Collection Appeal to stop an IRS levy or seizure.

Check out these tax resolution strategies that can help you resolve your back taxes:

If you owe less than $10,000 in back taxes: If you have a clean IRS record and all your tax returns are filed - you can call the IRS directly and they can (it's guaranteed) arrange a payment plan to be paid in 36 monthly installments.

If you owe $10,000 or more in back taxes: You will want to partner with a Certified Tax Resolution Specialist or a tax attorney to increase your chances of qualifying for an IRS payment plan, helping you settle your back tax debt for the lowest possible amount, and removing bank levies, tax liens or wage garnishments.

Offer in Compromise

If you can't afford to pay your back taxes in full, the Offer in Compromise program provides taxpayers who owe the IRS more than they could ever afford to pay, the opportunity to pay a small amount as a full and final payment. Taxpayers who attempt to file for an Offer in Compromise on their own often put themselves at risk of not qualifying for a settlement or they end up paying more than they have to.

IRS Payment Plans

If you can't pay your back taxes in full but could potentially pay them back over time, you can negotiate a reasonable monthly payment plan with the IRS. Once an IRS Payment Plan (also known as an Installment Agreement) is established, the IRS will not enforce collection action, including the levy of bank accounts or wages, as long as the taxpayer remains current with all filing and payment obligations.

Delinquent Tax Returns

To qualify for an IRS payment plan or Offer in Compromise tax settlement to resolve your back taxes, you need to file all delinquent tax returns with the IRS. Regardless of what you have heard, you have the right to file your original tax return, no matter how late it's filed. Until you have filed all legally required tax returns, the IRS will not entertain any type of tax settlement or payment plan to settle your back taxes.

Expiration of Statutes of Limitations

The IRS is not able to collect on expired back taxes. The IRS has 10 years from the date of assessment (usually close to the filing date) to collect back taxes. An expert tax attorney, tax CPA or tax resolution specialist can help resolve your back taxes and IRS problems by just by advising and strategizing with your to wait out the 10 year expiration date. We accomplish this by obtaining and analyzing your IRS Tax Transcripts and Records of Account.

Bankruptcy

As a last resort for resolving back taxes, you can file for bankruptcy if the IRS rejects your IRS Payment Plan or Offer in Compromise. However, only a seasoned tax attorney, CPA or Certified Tax Resolution Specialist can provide tax help to show you the proper sequence of events to declare bankruptcy and completely eliminate all of your back taxes, if you are eligible.

Offshore Bank Accounts: IRS Tax Settlements

If you owe back taxes on undeclared funds in overseas bank accounts, being proactive about disclosing your foreign funds can help reduce your chances of criminal prosecution, minimize severe IRS penalties and work out a structured IRS payment plan. If you believe that you owe back taxes on your foreign accounts, you will need a tax attorney or certified tax resolution specialist to provide professional tax help and experienced representation to proceed in your best interest.

Innocent Spouse Tax Relief

If you owe back taxes due to your spouse's (or ex-spouses) actions, you may be eligible to obtain tax relief by qualifying as an innocent spouse. This means that if you can prove you are an innocent spouse, as defined by the Internal Revenue Code, the IRS can relieve you of this debt and obtain tax relief, you may not be subject to the taxes caused by their spouses or ex-spouses.

Investment Fraud Representation

If you owe back taxes paid on phantom profits from a fraudulent investment scheme ("Ponzi" Scheme), you may be eligible to take advantage the United States Tax Code (law) to recoup 30% to 40% of your losses. This highly technical and complex process can help you reduce taxes paid in previous years resulting in refund with interest.

Payroll Tax Problems

If you owe back taxes on delinquent payroll and employment taxes, it is important to resolve payroll tax debt problems swiftly to protect the future of your company since the IRS assigns a higher priority to collecting employment taxes than income taxes. We've helped businesses across the nation permanently resolve payroll problems and back taxes.

Freedom of Information Requests

It is important to understand how the IRS has assessed back taxes and penalties against you. You have the right to see governmental documents, including your IRS files, to better understand your IRS problems. The IRS must disclose the information used to assess back taxes and interest against taxpayers.

Why hire a Tax Attorney or Certified Tax Resolution Specialist?

While taxpayers may always represent themselves before the IRS to resolve back taxes and IRS problems, many taxpayers find dealing with the IRS frustrating, time-consuming, intimidating or all of the above and so they make the decision to hire professional tax help (specialized tax attorney, tax resolution firm, etc.) to negotiate a tax relief settlement with the IRS on their behalf.

What to Expect When Resolving Your Tax Debt

Many of our clients who retain our tax help services are interested in knowing how their life will change and when they can expect these changes to happen. Upon retaining our firm to resolve your tax debt, some of the relief will be instant and some will be over time. It is important to keep in mind that IRS problems don't start overnight and can take some time to resolve. The good news is that you don't have to worry anymore and your IRS problem will be resolved.

ROAD MAP TO RESOLUTION

Free Consultation: If you have never been a client of ours, the first step is to call or come in for your free consultation. At this meeting, an experienced Tax Consultant will evaluate your situation and discuss the available options for resolving the matter. This generally takes about an hour; however, there are times where the information provided at this meeting is not sufficient to determine a course of action.

1. Retaining Tax Resolution Services: At the end of your free consultation, you will be given the opportunity to retain us as your tax representative. You will be required to sign a Retainer Agreement letter and make financial arrangements in order to pay for our tax help services. We will file a Power of Attorney (POA) with the IRS. This will provide you with immediate relief because from this point on the IRS will be required to contact us instead of you. If they should happen to contact you, all you need to do is politely request that they contact TRS directly and provide them with our phone number. A separate POA may be required for any State problem.

2. Beginning the Tax Resolution Process: You will be assigned a case manager who is in charge of your case. All of our case managers are extremely qualified and are a Tax Attorney, Certified Public Accountant (CPA) or an Enrolled Agent (EA). Together we'will develop a strategy for resolving your case and advise you on what steps to take for the most effective resolution. Your case manager is available to you by direct dial phone, individual e-mail, or in person. At TRS we employ the team approach to resolving your tax debt. Our case managers are supported by a staff of experienced technical specialists, who from time to time, may have contact with you as well regarding your case.

3. IRS Compliance: Generally before any tax resolution can be negotiated, you must become a compliant taxpayer. Your case manager is experienced in what must be done to achieve this and will advise you accordingly. For the most part you must file delinquent tax returns and demonstrate that you are keeping up with your current tax payments. For those of you that have incomplete records, TRS has developed methods for completing the preparation of tax returns in order to get them filed.

4. Tax Settlement Negotiation: We will propose a plan of resolution to the IRS that you can live with and see through to acceptance. We have a high tax relief success rate and pride ourselves in obtaining the best settlement for you under the law. However, it is rare that a proposal is accepted right away. Through diligence, persistence and follow-up our knowledgeable staff will monitor, provide additional information to the IRS as needed, and negotiate your proposed resolution until acceptance is gained.

5. Tax Resolution is Reached: We will review the final resolution of your case by the IRS to make sure it is as agreed upon. If not, we will insist that it be changed to reflect what was agreed to. If the IRS is unwilling to do this, we will advise you as to what your options are for the next step. Finally you will be advised on what you must do in order to succeed with your resolution and avoid future tax problems.

Get Tax Help Now, Call 866-IRS-PROBLEMS for a Free Tax Relief Consultation!

Why hire a Tax Attorney or Certified Tax Resolution Specialist?

While taxpayers may always represent themselves before the IRS to resolve back taxes and IRS problems, many taxpayers find dealing with the IRS frustrating, time-consuming, intimidating or all of the above and so they make the decision to hire professional tax help (specialized tax attorney, tax resolution firm, etc.) to negotiate a tax relief settlement with the IRS on their behalf.

Delinquent Tax Returns

Many people use the head in the sand strategy when they fail to file tax returns for a particular year. They are so terrified of the IRS that they just stop filing. This is a fundamental mistake and fails to take into account the real view of the IRS on delinquent tax returns.

Starting in the late 90’s, the IRS underwent a complete shift in philosophy when it came to dealing with taxpayer issues. Essentially, the agency stopped spending hundreds of hours of manpower to collect a few thousand dollars in taxes. Instead, the IRS came to the conclusion it was better in the long run to simply get taxpayers back into the system. This philosophy applies to delinquent tax returns, to wit, the IRS is more interested in getting you back in the system than beating you into the ground.

Need Help with IRS Problems?
Click Here To Talk to a Tax Professional

If you haven’t filed tax returns for a few years, the first step is to have returns prepared for those years. You may have excellent records for those years, but this is fairly unlikely. If you don’t, you can request copies of W-2s and income statements from the IRS, which essentially totals the income the IRS has on record for you for a particular year. Using these figures, tax returns can be prepared and filed.

If you continue to do nothing regarding delinquent tax returns, the IRS will eventually take action. The agency will first create and file a substitute return. This return is created using all the income sources reported to the IRS by employers, vendors and so on. The IRS then assumes you are single with no dependents and uses the standard deduction for the relevant year in determining the outstanding tax due. Once the tax assessment is made, the IRS will start pursuing your assets through liens, levies and garnishments. This means your bank account can be frozen, massive percentages taken from your paycheck and so on. The point being that you do not want to let delinquent tax return problems grow. You must deal with these issues and not procrastinate. 

Once you’ve created tax returns for the missing years, you may realize you don’t have the money to pay the taxes. The IRS acknowledges this situation occurs frequently and will set up a payment plan for the repayment of overdue taxes.

In dealing with delinquent taxes, we strongly encourage you to use a tax professional with experience in the field. Tax attorneys and CPAs are the best option and should save you far more money in taxes than they will charge you. An additional advantage of going this direction is you will not have to speak with the IRS. The tax professional will handle everything, which brings peace of mind to a lot of people.

Delinquent tax returns are not the end of the world. The key to overcoming the problem is to take steps before the IRS does. Delinquent tax returns can add unnecessary stress to your life. If you do something about them, you’ll find the process is fairly painless.

Unfiled Returns

There are numerous practical reasons to file tax returns. Whether buying a home or financing a business, copies of filed returns must be submitted to the lending institution. Social Security retirement and disability benefits as well as Medicare are all computed based on a person’s lifetime earnings reported to the IRS and the Social Security Administration. State benefits such as unemployment compensation and industrial insurance are also based on reported income.

Why do otherwise law-abiding, conscientious citizens suddenly stop filing federal income tax returns? IRS research has shown taxpayers first fail to file a return in a year when circumstances change.  For either emotional or financial reasons (or a combination of both), they are unable to prepare and file a return.  The reason might even be procrastination. Whatever the reason, failure to take corrective action only compounds the problem.

When the next year’s return is due, the taxpayer faces a dilemma. Will filing call attention to them?  What about the forms needed to prepare the earlier return?  What about the financial burden of paying taxes due in previous years?  What if they have lost some of the records needed to prepare the earlier return?  There is also the stress of worrying about being discovered by the IRS.  

The IRS continues to improve its database of income transactions and increase its ability to identify people who have a filing requirement but have failed to file a return.  Eventually, contact will be made and the correct tax liability computed.  By this time, however, the original tax bill will be multiplied many times by the addition of interest and penalties.  The IRS also has a wide range of civil and criminal sanctions available that can be imposed on persons who fail to file returns.  From any perspective, the consequences of failing to file returns are just not worth it!

The law allows the IRS to file a substitute return for people who do not voluntarily file.  A series of letters is first sent explaining the possible action and the recourse available.  If no return or other indication of disagreement such as a request to exercise appeal rights is received, the IRS proceeds with filing a basic return that does not include any additional exemptions or expenses a person may be entitled to.  If the IRS has already filed a substitute return, it is still recommended the person file their own return to claim any additional items.  The individual’s account will generally be adjusted to reflect the correct figures

Another reason to file is because the clock is running on any refunds due. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within the three years, the money becomes the property of the U.S. Treasury. After the expiration of the refund statute, not only does the law prevent the issuance of a refund check, it also prevents the application of any credits, including overpayments of estimated or withholding taxes, to other tax years that are underpaid.

On the other hand, the statute of limitations for IRS to assess and collect any outstanding balances does not start until a return has been filed. In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.

So, what should a person do who has one or more unfiled tax returns? They should immediately contact a tax professional or the IRS and get the delinquent returns filed. Failure to take prompt corrective action only compounds the problem! The fact that you don’t have the money to pay should not stop you from acting. The IRS has payment plans and other options available.

Whatever you do, take action before the IRS comes knocking.

Deceased Tax Returns

If a person dies, their finances are immediately converted into something called an estate. The estate is then responsible for filing a tax return covering the finances including income and distributions to heirs and beneficiaries. However, a final personal tax return must still be filed for the deceased.

The final personal tax return for the deceased is known as Form 1040. Yep, you file the same tax form as you would for any personal tax return. It is hard to believe the IRS passed up an opportunity to create another form, but there you go. Miracles do happen.

When determining the income and taxes due for a person who passes away, the date of death is the cutoff. All income earned before that date for the year goes on the personal tax return. All income earned after death is the responsibility of the estate and will be reported on the estate tax return.

As to deductions, there is good news. Regardless of the time of the year when the grim event occurs, you can claim the full deduction for the year and any other expenses that occur prior to death. Put another way, you don’t have to calculate any ratios based on the number of months that have passed. If someone passes away in February, you still get the full write-offs for the rest of the year.

When a person passes away, an executor or trustee will be in charge of their estate. The exact designation depends on what type of estate planning they did. Nonetheless, this person will sign the tax return and note the person is deceased. This should take care of everything with the IRS excluding the estate tax return. 

What happens if the deceased is due a tax refund? In such a situation, the IRS will not just kick out a refund unless the deceased was married. If married, the refund is sent to the spouse. If not, you must file a Form 1310 to get the refund. This form basically says you are claiming the refund, have the right to do so and absolve the IRS of any involvement in subsequent disputes.

IRS Debt Tax Attorney

The IRS has only one interest when it comes to you – your bank account! Fighting the IRS is difficult, which is why a quality IRS debt tax attorney is so important to prevailing.

The tax code and regulations interpreting it exceed well over 50,000 pages. Former President Jimmy Carter called the code and regulations a crime against humanity. Whether you are a conservative or liberal, I think we can all agree on that assertion when we are trying to fill out our taxes!

The IRS wields the tax code and regulations like a sword when it goes after taxpayers. Tax issues are so confusing that even the most sophisticated individual has no chance when battling agents. This is where a tax attorney can make a huge difference in bringing an end to your tax problems without also bringing an end to your bank account.

Taxes are so complicated, that attorneys actually specialize in the field. A quality tax attorney knows the codes inside out as well as the regulations interpreting them. This makes a world of difference when you sit down in front of an IRS agent who is ready to go back and forth on code sections. 

An additional benefit to a tax attorney has to do with evidence. Anything your tax attorney says is not evidence. Anything you say is. Given this, most tax attorneys take the lead in brawling with the IRS and tell you, the client, to shut up unless the attorney tells you otherwise. This is a very smart approach as it keeps you from making statements that end up getting you into more trouble than when you started. In fact, most tax attorneys won’t even let you go to meetings with the IRS!

Owing a debt to the IRS is not a good situation to be in. The Agency does not go away. It will also take steps that are simply brutal. It will clean out your bank account. It will garnish your wages. It is a nightmare. If you have tax problems, don’t stick your head in the sand. They are not going to go away. Speak with a tax attorney immediately. The consultations are free, so you can find out where you stand on your IRS debt without risking anything.

 source : http://www.businesstaxrecovery.com/

Penalties for Tax Evasion

Nothing gets IRS agents frothing at the mouth more than a good tax evasion case. If you get nailed for tax evasion, what kind of penalties are you looking at?

You can take every possible legal step to minimize your taxes and a court will tell the IRS to take a hike if it challenges the steps. Fall over the line into illegal maneuvers, however, and you are facing charges of tax evasion. In such a situation, you are in for a very bad experience. 

What are the penalties for tax evasion? Let’s start with the grey motel – jail. Yes, a single count for tax evasion carries a sentence of up to 5 years in jail. Most tax evasion cases come with multiple counts. Helio Castroneves faces six counts at the time this article is being written. If convicted, he faces 30 years in jail. That is a long time. With good behavior, years will be trimmed off. That being said, do you really want to spend even a day in jail?

The other side of penalties for tax evasion is financial. First, you are going to have to pay the back taxes along with penalties and interest. As a general rule, just double up whatever you were hiding and start adding money from there. Yes, that’s a lot of cash to come up with, particularly if you are sitting in jail! 

On top of that amount, you are also going to face fines for committing a crime. These usually run in the $250,000 range for each act of evasion. Much of the total penalty is dependent on the circumstances of the case, to wit, whether you come forward and voluntarily report the situation or fight the process through to the bitter end.

The penalties for tax evasion are pretty extreme. All and all, you would be best to avoid risking them. If you have any doubts of the consequences, sit down with a criminal attorney to find out more about the consequences. It will most likely scare you straight as they say.

 source :http://www.businesstaxrecovery.com

What is Tax Evasion?

Paying taxes is not much fun for anyone. There is a legal way to minimize the amount you pay as well as an illegal way. This raises the question of what is tax evasion?

The concept of tax in the United States is based on a pretty simply statement. If you earned it, you have to pay tax on it unless there is some provision of the tax code that allows you a discount. The mortgage interest tax deduction would be an example of such a provision. 

This overall view means that it does not matter how you earned the money or even where. If you sold illegal drugs, technically you are supposed to pay taxes on the money produced. If you live and work in Japan full time, you still have to pay US taxes even though you never step foot in the United States. Obviously, there is a tax provision that minimizes this tax or nobody would work outside the US, but you get my point.

The concept of using every legal means at your disposal to minimize your tax liability is known as “tax avoidance.” What is tax evasion? It is when you step over the line and start using illegal methods for minimizing your tax liability. Let’s consider an example. 

Let’s say I run a car detailing business. I do all the work myself. Many of my clients pay me in cash. At the end of the year, I am supposed to total up all of my revenues including the cash, report it to the IRS and pay the appropriate taxes. If I don’t report all or part of the cash, then I am illegally pursuing a tax evasion scheme.

Tax evasion carries some stiff penalties. Remember, the IRS is matching your reported income to your bank account balances and other informational reports it receives. This makes it fairly easy for them to nail you. Sitting in jail with some very rough people because you cheated on your taxes is a pretty stupid thing to do, so don’t. 

source : http://www.businesstaxrecovery.com

Streamlined Sales Tax Project

The United States Supreme Court has overruled state efforts to collect sales tax from internet businesses because of the burden involved. The Streamlined Sales Tax project aims to fix that.

In cases like Bellas v. Illinois and Quill Corp. v. North Dakota, the United States Supreme Court has repeatedly put an end to the efforts of states to collect sales tax from internet sites that sell products to people in their state. The primary reason for this is the incredible burden it places on the websites. The burden would include:

• tracking your sales for customers in fifty states,
• figuring out the sales tax rates for each state,
• creating a program with each rate for each state,
• collecting and partitioning the sales tax for each transaction,
• figuring out how to file returns for each state,
• preparing the returns for each state,
• filing and paying the tax for each state.

As if that wasn’t bad enough, now you have to go through and break out the sales tax and use tax for each county, city and town jurisdiction. At last count, there were over 11,000 different ones. That’s a lot of tax returns!

The states have finally stopped trying to convince the Supreme Court to reverse itself. Now they are trying to come up with a solution to the burden issue. The Streamlined Sales Tax Project is the most popular option at the moment. As economic times get tougher, more and more states are giving serious thought to joining it.

The Streamlined Sales Tax Project was started in 2000. As the name suggests, the goal is to create a simplified and uniform tax filing basis for the sales tax on internet sales. So far, 21 states have amended their laws in accordance with the Project.

The interesting thing about the project is what it is not – a success. In nine years, it has only been able to get 21 states on board. That can only be looked at as a brutal failure. The “SSTP” must have all of the states on board before it can hope for the Supreme Court to reverse itself. It looks like that event is going to be a very long way off. 

source : http://www.businesstaxrecovery.com/

The Internet Sales Tax Issue

There is a golden egg floating out there for the tax man – the Internet. The issue of how to deal with the Internet sales tax has been an issue of great debate, so let’s take a closer look.

The internet sales tax issue is primarily a state issue. Most states charge a sales tax on everything sold in the state. When you head down to the dealer and buy a car, you pay sales tax. When you go to the store to buy groceries, you pay sales tax. When you buy a book at a bookstore in a mall, you pay sales tax. This is a huge revenue source for most states.

Now consider the internet. It is a digital environment. This means each “store” on the web really doesn’t exist anywhere. At best, you could say the individual person or company that owns the site exists in some physical location. For instance, the company that owns this site is in San Diego, California.

This location issue is a huge problem when it comes to sales tax collection. Why? A state can only collect taxes on sales that occur in a state. Moreover, a state can only force a company to collect sales tax if the company has a physical presence in the state. If you buy a book at a bookstore in a mall, sales tax is collected. If you buy it at Amazon.com online, it is not.

As you might imagine, this drives the politicians out of their minds. The first thing they did to deal with it was to pass laws stating that any company that sold products in the state had to collect and pay sales taxes. The online companies objected to this because it meant that they would literally have to collect and pay sales tax in each of the 50 states. That meant a huge administrative burden ranging from keeping the money straight to figuring out the sales tax returns for each state.

As you might imagine, this dispute ended up in court. Eventually, it made its way to the highest court in the land – the Supreme Court. After hearing arguments, the Supreme Court agreed with the online retailers and barred all of the state collection efforts in two decisions - Bellas Hess v. Illionis and Quill Corp. v. North Dakota. At the same time, however, the Court indicated the states could collect sales tax if they could agree to a unified method that would not be burdensome to online businesses.

The states have yet to agree on any uniform collection system. With money really tight, we are seeing some progress. The states are now thrashing around with something called the “Streamlined Sales Tax Project”. It is an effort to create a unified, simple method for online businesses to collect and pay sales taxes. As of the writing of this article, 20 plus states have joined on and some retailers are voluntarily doing so as well.

Ultimately, the sales tax issue is one that is going to be hotly debated over the next few years. It is also going to be an issue that ends up in court repeatedly. Make sure to bookmark our “internet tax” section to see the latest developments. 

source : http://www.businesstaxrecovery.com

IRS Tax Debt

There are many different types of debt you can owe. IRS tax debt is the worst bar none. Why? You cannot get rid of it in bankruptcy and the IRS will hunt you endlessly.

The government is very forgiving in many ways. Collecting its revenues is not one of those areas. The laws are set up to give it all the power and you, the taxpayer, none. Tax debt is not dischargeable in bankruptcy, the only such debt that gets this kind of treatment. As a result, your tax problems will never go away.

So, what’s another debt? The last few years have seen an economic environment that has been challenging to say the least. With real unemployment rates at nearly 17 percent, people have been walking away from their debts at shocking rates. While this works with personal debt, tax debt is different. Not only can’t you get rid of it, but the IRS becomes very aggressive when it goes after it.

What with the IRS do? Well, it is a cornucopia of nightmares. The agency usually starts off by filing a lien against any property you have. This makes it impossible to sell for the most part. The Agency will then look for your bank account and suck all the cash out of it. The next step is to hunt down your place of employment. Why? The IRS is going to garnish your wages. These there steps will be applied time and time again until the tax debt is paid. It can take years…very painful years.

Is there anything you can do to deal with IRS tax debts? Yes. The Agency has a completely different view if you proactively address your debts. Are you going to get off by paying a penny on the dollar like you see in certain television advertisements? Please. We are talking about the IRS here. Why would the Agency ever agree to such arrangements? They won’t, but good representation can get your tax debt reduced substantially and a payment plan put in place that you can live with. As long as you stick with it, the Agency will leave you alone.

Don’t let tax debts sit and fester. You’ll be the worse for it when the IRS comes calling. Speak with a tax professional today and get the matter taken care of before it becomes a complete nightmare. 

source : http://www.businesstaxrecovery.com

Filing Late Taxes

The Internal Revenue Service is a bit touchy about filing tax returns. It would prefer you to file a return or extension to doing nothing, even if will be filing late taxes. If worse comes to worse, the IRS will simply put you on a payment plan. Failing to file anything, however, can lead too more unwanted attention from the agency than you could possible want to receive.

In general, you should always try to pay your taxes whenever possible. Failure to do so can lead to brutal penalties and interest charges. If the IRS thinks you are up to something funny, the penalties and interest can add up to 25 percent of your tax bill. That is a big chunk of change!

If you are due a refund, but just did not get around to filing your taxes, you do not have to worry about penalties and interest. There are none since you are owed money. That being said, are you nuts? Why would you give the government an interest free loan? What could you be using that money for in your daily life? Get off the couch and get a return filed so you can get your money back. For obvious reasons, few people let refunds sit at the IRS. If you are insanely lazy, keep in mind you will lose the refunds if you do not claim them within three years of the original filing date. Frankly, you deserve to if you are that lazy!

If you owe taxes and do not have the cash, there may be an alternative you can use. To the surprise of many, the IRS accepts credit cards as a payment method. With high interest rates, credit cards are not a great option. On the other hand, credit card companies cannot audit you!

The IRS understands that a certain percentage of taxpayers may not be able to pay all of their taxes. Filing late taxes will not result in an IRS attack. The key to keeping the agency off your back is to file the return even if you cannot pay.

 source : http://www.businesstaxrecovery.com

IRS Dispute Lawyer

Whether you’ve failed to pay taxes for a few years, are being audited or are just having problems with the IRS, it is important to understand that you are dealing with a ferocious force. The IRS is charged with collecting federal taxes and the IRS agents take the job seriously. You can expect them to be intimidating and extremely aggressive in trying to get into your tax records. Frankly, fighting the IRS is one of the worst experiences many people ever suffer. 

If the IRS comes calling, you do not have to suffer through the misery of dealing with IRS agents. There is absolutely no reason you should ever meet with anyone from the IRS. Instead, you should retain an IRS dispute lawyer to represent you.

There are significant benefits to retaining an IRS dispute lawyer. First, the lawyer will become the communication contact for the IRS, meaning you do not have to talk to agents. This, of course, prevents the IRS from intimidating you and asking for information the agency has no right to see. Further, the IRS dispute attorney is going to be familiar with your rights and put the IRS in its place if it tries to overstep.

Perhaps most important, an IRS dispute lawyer is on your side. The IRS specializes in tax disputes. You do not. An IRS dispute lawyer does. This effectively means the lawyer can give you advice on the best strategy to pursue and his or her impression on the potential incomes. Shockingly, many taxpayers make the mistake of listing to IRS agents when deciding what to do. This almost always results in the taxpayer making a bad deal. An tax lawyer is going to prevent this from happening.

When hiring an IRS dispute lawyer, you need to focus on the following issues.

1. Specialization – Does the prospective lawyer deal primarily with IRS disputes?

2. Comfort – Tax issues invariably are stressful and you are going to have to disclose vital information to the lawyer. Are you comfortable with doing so and the lawyer in general?

3. Licensing – Is the lawyer licensed? Do an Internet search for “[your state] Bar Association” and look them up in the licensing section of the site. Have there been any complaints against the lawyer?

4. Fees – How does the lawyer bill you and for what. Get it in writing and get the exact items being billed for. Some lawyers bill for secretary time and so on. You want to make sure you understand what you are getting into.

5. Time – How long has the lawyer been practicing. While there are brilliant lawyers that are young, you’ll have to determine whether they have sufficient experience to make you comfortable.

 An IRS dispute lawyer is worth their weight in gold. The IRS lives through intimidation and your tax lawyer will put a stop to it. Whatever steps you take, do not let the IRS run all over you. Retain an IRS dispute lawyer and you’ll be thankful you did.

Tax Attorneys

When dealing with taxes, there are two approaches. The proactive approach involves planning and implementing strategies to minimize taxes before filing periods arrive. The reactive approach involves trying to defend yourself when the IRS or a state tax agency comes calling, typically in the form of an audit. Tax attorneys fill both roles.

From the proactive perspective, tax attorneys can be invaluable in helping you create a plan to minimize your tax liability. A good tax attorney is going to sit down with you and review not only your finances, but your life. The attorney is going to get a good feel for your comfort level, your concerns and where your goals. The attorney is then going to make specific recommendations about the best way to meet your goals using tax strategies you will be comfortable with. So, why doesn’t everyone go out and retain a tax attorney? The fees can simply be overwhelming. You are getting an expert opinion and will pay for it. Unless you’re making significant amounts of income, a tax attorney probably is not within your reach.

Need Help with IRS Problems?
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If the tax man comes calling, you no longer have much of a choice in regard to getting a tax attorney. The IRS is a very aggressive agency when it comes to audits. The IRS agents have no problem trampling on your constitutional rights. In fact, they will try to get you talking because everything you say is evidence against you. A good tax attorney will put a stop to these intimidating and aggressive tactics. The attorney will take over all communication responsibilities, which relieves you of the burden. Further, anything the attorney says to the IRS can’t be used as evidence against you, a very important benefit to using a tax attorney. Finally, tax attorneys are on your side. If a deal needs to be made, they will give you objective advice on your options, answer your questions and make recommendations. 

Whether you are looking for tax planning advice or have received an audit notice, tax attorneys will give you good, objective advice. If nothing else, tax attorneys are comforting as it is nice to have someone on your side.

Filing Late Taxes

The Internal Revenue Service is a bit touchy about filing tax returns. It would prefer you to file a return or extension to doing nothing, even if will be filing late taxes. If worse comes to worse, the IRS will simply put you on a payment plan. Failing to file anything, however, can lead too more unwanted attention from the agency than you could possible want to receive.
In general, you should always try to pay your taxes whenever possible. Failure to do so can lead to brutal penalties and interest charges. If the IRS thinks you are up to something funny, the penalties and interest can add up to 25 percent of your tax bill. That is a big chunk of change!

Need Help with IRS Problems?
Click Here To Talk to a Tax Professional

If you are due a refund, but just did not get around to filing your taxes, you do not have to worry about penalties and interest. There are none since you are owed money. That being said, are you nuts? Why would you give the government an interest free loan? What could you be using that money for in your daily life? Get off the couch and get a return filed so you can get your money back. For obvious reasons, few people let refunds sit at the IRS. If you are insanely lazy, keep in mind you will lose the refunds if you do not claim them within three years of the original filing date. Frankly, you deserve to if you are that lazy!
If you owe taxes and do not have the cash, there may be an alternative you can use. To the surprise of many, the IRS accepts credit cards as a payment method. With high interest rates, credit cards are not a great option. On the other hand, credit card companies cannot audit you!
The IRS understands that a certain percentage of taxpayers may not be able to pay all of their taxes. Filing late taxes will not result in an IRS attack. The key to keeping the agency off your back is to file the return even if you cannot pay.
source : http://www.businesstaxrecovery.com