How Divorce Can Affect Your Taxes

Divorce - Tax Issues
Just as with many other things in life, divorce can also affect your taxes. When it comes to divorce, you should not let your emotions take over. Divorce tax issues are some of the most common tax issues that people in the US face. You need to consider your CPA's advice on how to file your return. Community property states will treat certain issues differently than other states. There are basis of property issues, transfers between spouses, etc. to consider.

Innocent Spouse's tax liability: An important divorce tax issue.

If you qualify for "innocent spouse", then you may not be liable for paying the entire amount that you jointly owe. You may only have to pay a portion, or none of the balance that is due. Most married couples file their returns jointly. However, at the time you seek divorce, you may not want to pay your husband's taxes, especially if you didn't benefit from the income. It is very hard to win the IRS over to your way of thinking. Please see the section on innocent spouse under the "FAQ" tab,

Some Other Common Divorce Tax Issues:

Issue 1- You are getting divorced and you are wondering whether you still have to pay all of the taxes on your joint return. Even if you didn't benefit from the money, such as in the case of under reported income, you are still liable for 100% of the tax. The Internal Revenue Service seeks to collect the balance that is due from any one of the parties. But if you qualify for "innocent spouse", then you will not have to pay the additional tax that is due.

Issue 2- One of the many divorce tax issues that most people face is whether they should inform the IRS that they are getting divorced. There is no need to. If you file married filing separate, then the IRS will know. If money is owed from previously filed years as married filing joint, then when resolving the liability, you will report your status on the 433a form you fill out.

Issue 3- If you are wondering whether or not you can deduct legal expenses incurred on your divorce, then the answer is no. You cannot deduct these expenses. Legal expenses relating to property and taxes are deductible. Have your attorney give you a separate accounting. Expenses for the collection of alimony is deductible, as alimony is taxable.

Issue 4- Before you finalize your divorce, it is advised that you get your joint credit report from the major three credit reporting agencies; even if you completely trust your spouse. Many people may get into debt without the knowledge of their spouse. Credit issues come into play when considering a joint payment plan for any delinquent balance, as well as qualifying for innocent spouse.

I can help those residing in different areas with their prior years taxes and returns. My practice is devoted primarily to representing taxpayers before the IRS. I specialize in helping people with tax problems, IRS problems, and give you the advice to your issues at hand.

Check out our website www.taxproblem.org for free advice.

Think Again

So, You Think You Have Your IRS Situation Handled?

Do You Really Have The Monthly Payment Plan/Installment Agreement That You Think You Have?

Think Again! I don't care who negotiated it for you - chances are it is not a valid agreement. What's your computerized two digit agreement status code? Do you have a copy of the 433D Form in your hand signed by not the revenue officer, but the manager or branch chief? If not, I would be very concerned. Even if you do have both of the above, there are three things that you can do innocently to break the agreement. This is why over 90% of the people I meet with do not have a valid installment agreement. Without one, the IRS can and will take collection action. Your spouse's paycheck, your social security, your company retirement, etc., can all be seized!

Has Anyone Pulled Your Record Of Account For Years Surrounding The Years You Owe?

I have found many mistakes in them. You may have a refund coming. Or since a year wasn't included in the agreement the IRS can now seize your paycheck, etc., to pay it. Even if that year was never mentioned in the discussions to get the agreement in the first place!

Do You Owe Payroll Taxes From A Corporation?

I can save you money with legal ways you probably haven't considered yet, and can possibly cut your taxes in half.

Did You Apply The Statue Of Limitation Rules To See If There Are Any Years You Don't Have To Pay?

You don't have to file a bankruptcy (and ruin your credit) to do this!

Did You Know Over 90% Of Bankruptcies, In My Opinion, Are Not The Best Way To Handle The IRS?

If you owe a lot of money to people other than the IRS and need creditor protection, or some years you owed were assessed over three years ago and qualify for a discharge (you never have to pay it) then a bankruptcy will help. Most other reasons don't hold water - find out why.

Do You Qualify For An Offer In Compromise?

This is where the IRS will take less money and forgive the rest! I can probably tell you within fifteen minutes on the phone if you qualify.

Do You Think The IRS Can't Touch You Because You Are Earning Money Off The Books, And Are Essentially Hiding Out?

Then think again!

I Have Talked To A Lot Of People Who Are Afraid To Find Out That What They Spent A Lot Of Time And Money For Was Not Valid!

It's human nature to not want to accept big errors. What will it take? Are you going to wait for the IRS to seize your house, paycheck, or spouse's paycheck? In community property states, marriage makes your spouse's income subject to levy for taxes you owed prior to marriage! Does the IRS need to seize your business, life savings or retirement plan before you realize you are not protected? You now have a free and easy way to find out how to best handle your IRS situation. I invite you to have the courage to face it!

IRS Solutions

First some questions, then the IRS solutions...

1. Do you disagree with what the IRS is charging you an hour and what they quickly want you to pay?
   
   Read Appeals
   
    


2. Do you want to know how a bankruptcy can offset your tax liability?
   
   Read Bankruptcy
   
    


3. Are you looking for a tax advisor and want to know the qualifications to look for?
   
   Read Best Way To Select A Tax Advisor
   
    


4. Do you have returns that are not filed for yourself personally or your business? This includes form numbers such as 1040, 1120, 1065, 941, 940. etc. For these IRS solutions
   
   Read Delinquent Returns
   
    


5. Are you being charged taxes or income attributable to your spouse? They haven't paid, and you want protection?
   
   Read Innocent Spouse
   
    


6. Are you about to be audited, or currently going through an IRS audit?
   
   Read IRS Audit
   
    


7. Do you want information on tax liabilities relating to different IRS forms?
   
   Read Irs Forms
   
    


8. Do you want information on handling various collection letters and notices?
   
   Read Letters And Notices
   
    


9. Are you concerned about the IRS filing a lien or levy on you or your company?
   
   Read Liens And Levies
   
    


10. Are you interested in settling your debt with the IRS by paying less than the total amount owed? (Because of your lack of ability to pay, not because you think you have a good reason to get the penalties removed.)
    
    Read Offer In Compromise
    
     


11. Is the IRS currently charging you with unpaid taxes, no matter what type?  Do you not owe it or are you seeking IRS solutions to either reduce it, or to make affordable payments? You may also at this time be seeking a way to stop the IRS from taking your house, car, paycheck, etc. Do you owe money on tax returns you have not actually sent in to the IRS yet?
    
    Read Owing
    
     


12. Do you have a corporation or LLC that owes payroll taxes?
    
    Read Payroll Tax
    
     


13. Are you concerned about the penalties and interest charged to you ?
    
    Read Penalties And Interest
    
     


14. Are you scared of dealing with the IRS?
    
    Read Scared Of IRS
    
     


15. Think IRS matter is handled?  Think Again!
    
    Read Think Again

Scared Of IRS?

ARE YOU SCARED OF THE IRS?

Some People Say, "I'm Scared Of The IRS", Is That You?

The IRS relies on taxpayers being scared of the consequences of not filing on paying their taxes. They pray on that fear to effectively get people to file and pay, not only their taxes, but high amounts of interest and penalties.

Scared Of An IRS Seizure?

Although many IRS representatives will try to get your business by telling you that the IRS will seize your house, car, bank account, wages, land, etc., the truth is that seizures don't happen that often. If you make the effort to file any delinquent returns and to negotiate any taxes owed, the IRS won't try to seize your property. 

Why You Should Not Be Scared Of The IRS Seizing your assets!

Because educated taxpayers with experienced representatives know they have ways to avoid being a victim of the IRS. They only have as much power as we allow them to have. Unfortunately, we are so scared, or wait to the last minute to get help, that we allow ourselves to be frightened by unprofessional tax representatives.




We get many calls each week from people who never took out the time to search the Internet for complaints against the company they want to hire. So if you are saying in your head "I'm scared of the IRS", contact us now!



Call us now at 713-774-4467 and you will not need to be scared of the IRS Seizing your hard earned money!

Penalties And Interest

Penalties, Interest, And Ways To Reduce Your Liability

There are a lot of false promises being made to consumers by representatives concerning the removal of interest and penalties. Many people use that as a way to justify paying representation fees." If you can save me $20,000. of interest and penalties, I will gladly pay you $2,000." is an example. Unfortunately, interest is hardly ever waved, and penalties are not waved nearly as often as people are led to believe.

Reducing IRS Penalties

Removing penalties on your first late personal tax return form 1040 should be easy. It's pretty much a given. After you pay the liability you can call and request a penalty removal. Just tell them that you forgot to file on time, or thought that you did. Or you could fill out form 843 claim for refund.  I would still try to prove reasonable cause and not willful negligence was the reason.



You may use form 843 for any years of personal returns, or other returns that you want to claim a penalty abatement for.

Reducing Interest

Interest is charged when there is a balance due. When a tax liability is reduced or abated, the corresponding interest will be too. When a penalty is abated, the interest on that penalty must be abated too. Interest can be abated if it can be shown that it is attributable in whole or in part to an unreasonable error or delay by an officer or employee of the IRS. You have to prove...

• a) That the error or delay occurred in connection with 'a procedural or mechanical act' or a 'managerial act' associated with the case.
  
   


• b) The error or delay occurred after the IRS contacted the taxpayer 'in writing' about the case.
  
   



• c) No 'significant aspect' of the error or delay can be attributed to the taxpayer's actions.

If you want to request relief of interest charged due to an error or delay I encourage you to do so. I have never attempted to do this given the IRS posture in defending these claims. It is hard for an honest practitioner to justify charging the fees necessary to defend this, given the odds against it. You of course can try this on your own. I would look further into how cases are settled and what the taxpayer advocate has to say about it. A lot of research will be necessary. You can always appeal a decision  against you if the facts are in your favor.

The Three Ways To Reduce Your Tax Liability In General Are:

• a) Pull your record of account and make sure the IRS has recorded your payments. Make sure if they removed any penalties they took off the related interest. Make sure you file original returns for any years that they filed a SFR (substitute for return). Make sure you file original reports for any payroll report, under code 6020b that the IRS filed.
  
   


• b) Amend any returns that you think are not correct. Submit proof with the return and your copy of new return and the amended version. Do not be afraid of an audit by doing this. Submitting your documentation will prove your case, so they will see little chance in auditing you.
  
   


• c) Apply for penalty abatements according to the instructions in this site.
  
   

For more information, please see the IRS Appeals page.

Payroll Taxes

Unpaid Payroll Taxes

Individuals & Corporations Owing Delinquent Payroll Tax

Other Names are Trust Fund, the 100% penalty, and the IRS code section 6672...

You may be losing thousands of dollars in benefits, and risking audits and additional payroll tax liabilities in the future!

Corporations, LLCs, LLPs - I may be able to cut your payroll tax problems bill in half! You will pay only the amount taken out of each paycheck. You will save the matching portion, all the interest and penalties, and all corporate income tax owed. All this without filing a bankruptcy, offer in compromise, or request to drop penalties. The IRS has to accept this. I do this for corporations that owe payroll tax every single month! How great is that!?

Did you file the following with the internal revenue service?

• Final corporate and payroll tax returns.


• Liquidation papers and corporate minutes.


• Computation of gain or loss to the corporation and a deductible loss to you under the liquidation code sections.

Did you get your tax deductions on your personal 1040 tax return for...

• Money paid for stock.


• Money loaned to the corporation.


• Money you are paying on the trust fund liability (yes I can effectively make your trust fund tax deductible).

Have you closed the statute of limitations on the IRS coming back and assessing additional money against you personally?

Find out what you and your advisor may not know about your payroll tax liability!

 

Lost Your Payroll Records? Don't File Payroll Taxes Late! We Can Help File 941,940,W-2's, 1099's. State Unemployment Forms.

I can help you reconstruct them! It's no excuse for filing your 941, 940, and state reports late. penalties and interest add up fast. There are large penalties for not filing W-2'S,

no matter how late they are. The penalty can be removed when the reports are filed.

 

Payroll Tax Audit

I offer professional help to minimize the damage.  If as a result you owe more than you can pay, we will consider a payment plan, offer in compromise, or a restructuring as described above.

 

Protect your money and assets!

The items mentioned above are just some of the "loose ends" that need to be attended to in order to protect yourself now and in the future when you owe payroll tax (also known as trust fund, the 100% penalty, and IRS code section 6672), and get proper refunds for your losses. I am at your service, with the knowledge and reputation of many successful negotiations with the IRS.

You have nothing to lose and a great tax savings to gain by calling me at 713-774-4467. I want the opportunity to help you with your IRS tax liabilities and to protect your assets. Call me today to set up an appointment. I would also be happy to discuss this on the phone for your convenience.

Owing The IRS

Owing the IRS money is a very serious matter. Often a collection officer is not sympathetic to your current financial situation, even if you feel that the error is theirs and that you do not owe the tax! So if you want time to gather documents to prove that you do not owe the tax, or owe substantially less, then you must still provide the revenue officer with the requested collection information. This information will reveal where you and your spouse work, and where your assets are, including bank numbers.



If you do not give the revenue officer everything they demand, whether they are right or wrong, you risk levies and seizures of your paycheck, bank account, retirement account, social security check, and any other source of income. No matter how friendly a revenue officer may appear, always remember that they work for the government, not you! It is their job to collect all the money that their computer screen shows, in the shortest period of time.



After examining hundreds of cases a year, I have found that most people, when owing the IRS, in their attempt to resolve the matter, will overpay taxes, not file all required reports correctly, or suffer unnecessary levies and seizures of their assets. There are ways to remove taxes because of statute expiration, penalty removals, offers in compromise, etc. These things are often missed. There are ways to bind the IRS into an agreement that will stop them from additional collection action. In fact, I believe that over 90% of the people who tell me that they are in an installment agreement fail at least one of the five necessary tests.

Solutions When Owing IRS...

When owing the IRS, don't call a revenue officer of the IRS without first visiting with a taxpayer representative who does this every day. There are too many things that can go wrong when someone who does not have the day-to-day knowledge and experience tries to handle a representation before the collection division. The collection officers are trained to use many tactics to their advantage. I represent CPAs and Attorneys who otherwise would be quite capable of handling financial matters. However, they recognize my expertise in this area, and that it is necessary to hire someone with my level of experience.

Offer In Compromise

IRS Offer In Compromise

Applying for an offer in compromise is simple, yet I know of dozens of people who have paid for representation, only to find out that they never qualified for an offer in compromise in the first place. Some people send in a letter of compromise, requesting that penalties and interest be reduced because of "hardship". Please see my section on penalties if you want to request penalty removal. The Offer In Compromise program is unique as to its requirements. And yes, an offer in compromise can entered into after you establish a payment plan.

Here's the scoop... There are three reasons for filing offers. Each one allows you to settle your tax liabilities for less than the total amount owed. This tax settlement program may be the tax resolution or relief you are looking for.

Offer In Compromise - Doubt As To Liability

The first reason is doubt as to liability (there is doubt as to whether you owe the taxes and feel that the IRS will have difficulty proving it).

Offer In Compromise - Doubt As To Ability To Pay

The second reason is doubt as to your ability to pay the taxes owed given your current circumstances.

Offer In Compromise - Effective Tax Administration

There is a new third special case where taking your assets will create an undue hardship. Most cases by far are filed based on doubt as to ability to pay.

Offer In Compromise - Guidelines For Allowable Living Standards

The IRS uses a two part formula. Take your income, less allowable expenses (you need the IRS allowable expense chart for this). Your result is the amount they feel you can pay each month after paying your "necessary living expenses". Then multiply this number by fifty. Next add it to the equity (that is how much you pocket for yourself if you sold the item at a bargain sale) in each of your assets. For example... add the equity in your house, car, retirement plan, rental property, stocks, etc. to fifty times the monthly amount. The result is the total amount the IRS expects from you now in a lump sum. Or if you can pay it out over two years (maybe more) with interest added, you can do that instead. This calculation is subject to the IRS's opinion of the value of your assets, and the allowances they will give you when computing how much money you have available to pay monthly. The good news is that a knowledgeable and experienced professional in this area can convince the offer in compromise division to use values more in the taxpayer's favor. I can also get IRS offers accepted after they were turned down more than once before.

Hire An Experienced Professional To Settle Your Taxes Using The IRS Offer In Compromise Program

The benefits of paying professional fees will always outweigh the costs, assuming you qualify. This is not an area to price shop. You get what you pay for. It does not take a lot of time to fill out the forms involved. You pay for experienced negotiation time. We have been involved in cases where collection action was taken prior to concluding the offer in compromise. If you are going to file offers for any corporation, please talk to me first. You most likely will overpay if you do not. Oh, if someone tells you that they will settle your offer in compromise for "pennies on the dollar", without having done the above analysis, run the other way! The amount that offers are settled for depends on the income, expenses and assets of the taxpayer, not how good the representative is. Sure a good representative will argue for a lower payment, but showing you a statistic that says "Mr. X owed 1 Million dollars and I settled for $200" doesn't tell you how good the representative was. Maybe the client had no assets and wasn't able to produce income! Again, "DON'T BELIEVE THE HYPE"!

Solution...

Obtain a consultation with a very knowledgeable and experienced professional who personally works on at least a few offers per month. It should only take 5 minutes to 30 minutes to determine if you qualify. Sometimes they are based on a combination of doubt as to liability as well as doubt as to ability to pay. Obtain an evaluation of the current status of your payment plan with the IRS. The majority of people I speak to think they have a "binding" agreement with the IRS, when in fact they do not. They find it difficult to accept the fact that they may have spent a lot of time and money for nothing. Wake up! Your money and property are at risk here.

NEW OFFER IN COMPROMISE POLICY - All offers now have to have 20% of the offer amount submitted with the offer in compromise, or make the first monthly installment with the offer. The monthly payments must continue while the offer is being considered. If the offer is turned down, all payments are applied to the outstanding balance. No refunds. There is an exception to this if you qualify to not make these payments ahead of time.

Your Offer In Compromise Can Stop Collection Action Once It Is Assigned To An Offer Specialist

"Processable" Offers

An Offer In Compromise must be first accepted by the Offer administrative person, before it is assigned to an offer specialist. If your payment fee, or other items are missing, or if certain items on the forms are not filled out correctly, the offer will be returned. You should then correct what is wrong and resubmit the offer.

Offer In Compromise Specialist

Once the offer gets past the administrative area, it will be assigned to the person responsible for reviewing the forms in detail. Additional receipts are often requested to verify the amounts claimed on the forms. When the assignment is made, all collection action pertaining to the periods listed in the offer is suspended. Liabilities not listed are still subject to collection action. It's very important that the "record of account" the IRS has on the taxpayer(s) is pulled to check all outstanding taxes owed.

Offer In Compromise - Non-Liable Parties - Form 656-A & 656-B

Offers filed at the Internal Revenue Service Offer in Compromise division will be examined to determine the taxpayer's ability to pay the tax liabilities.The 433a form must be filled out showing the income and expense of the parties living in the taxpayer's household. So even if you live with someone who does not owe any of the tax that is the subject of the offer you are filing, the IRS needs to know their income. These "non-liable" parties will never be responsible for your taxes by signing the 433a. They are responsible for correctly stating their income and expenses on the form. Living with someone who makes more money than you do, can greatly limit the tax reduction that you are seeking by filing an offer. The offer division has a form for splitting your income that you can use. There is now a form 656-A and 656-B separating the instructions.

Offer In Compromise - Dissipated Assets And Doubt As To Ability To Pay

This is a great way for the offer division to add additional income to your offer. The original purpose of an offer based on "doubt as to ability to pay" was to see how much they can collect from you over the next 5 years or so. Offer payment periods can run till the end of the statute of limitations on collections for the years in question. The formula is based on the assets you have, and your available monthly income. Dissipated assets are assets that were in your hands and were sold or otherwise transferred. If you had any in the last approximately 6 years, and didn't pay any tax liabilities you had, past or present, the IRS will add back the value of the assets to the amount you have to pay. I had a case where the taxpayer gave a house worth $20,000 to his elderly mother to live in, six years prior to filing the offer. The offer division added $20,000 to the offer amount calculated from the two part formula discussed above!

Offer in Compromise - Don't Break It After They Finally Accept Your Offer

You must follow all the rules about timely filing and paying your taxes, according to the IRS "special" rules, as I've discussed elsewhere on this site. Your offer payments must also be made timely and for the correct amount. I know of two former clients who had their full tax liability reinstated because of owing personal taxes when they filed their next 1040 personal tax return.

Liens And Levies

A lien is a legal claim against real property filed in a county court house.

A levy is the action of taking an asset (wages, bank account, etc.) to satisfy payment of a debt.

A subordination is getting the IRS to allow another creditor a higher collateral security position in your assets.

If you get a levy notice, follow the procedures for contacting the issuer and resolving the matter.

The IRS will file a lien to protect their interests against you selling the property to a third party. For the most part there isn't much you can do about it. The IRS maintains that it has a right to protect their interests.

I can be of great help resolving lien, levy, and subordination problems. Call me now at 713-774-4467!

Removing IRS Liens

A good source for detailed information for a lien subordination is IRS Pub 764. Do a Google search and download a copy. It has a great section on how to prepare the application and what to do afterward.

Reasons the IRS will give you a subordination:

• a) You can offer approximately 3 times the value of your liability as collateral, or you can buy an insurance bond for approx. 3 times the liability.


• b) You can show that it will be easier for the IRS to collect more money by doing the subordination, like getting all the proceeds on the sale of your house, for example.

I have received approval for several subordinations depending on the circumstances. The following points should be helpful for your success.

You should acknowledge that you could and probably should have stopped this much earlier in the collection process. Understand that the IRS is not going to be sympathetic to your concerns about how tough it will be to successfully conduct your business. The IRS puts a lien on to protect them against 3rd party creditors getting your assets before they do. So why would they be willing to give up their creditor protection? Their general policy is not to remove or subordinate liens (or levies) unless you fit one of their acceptable categories.

First consider the question of whether or not you can live with the lien. It's usually not as bad as you initially thought. Is it hurting your credit? By the way, the IRS does not file the lien with the credit bureaus, so don't ask the credit bureaus to take it off. The credit bureaus pick up the lien on their own from court house records. You can remove it for a short time by sending a letter to the credit bureau explaining how this is not yours, (assuming that it isn't), or that it is grossly overstated. If there is no confirming response within 30 days, the credit bureau must remove it until they receive a confirming response. But this is the subject for a manual on credit repair. Anyway, you can use someone else's credit or don't use any credit till the liability is paid or resolved. Many times people you buy from will be sympathetic and help you work around it. I want you to consider living with the lien and focusing on paying off the liability as soon as possible. It's better than throwing your money away paying some misleading representative that promises to remove the lien using some type of trick or exceptional experience!

If You Really Need A Lien Subordination

1. Liens really hurt companies when sales and financing are inhibited. A business could be ruined without a subordination. A subordination may be needed so a bank or accounts receivable financing company may become a first position creditor.

2. Make sure you answer all items on the application for a Certificate of Subordination of Federal Tax Lien, and include all documents that explain what you are trying to show them. Then when finished, sit back and ask yourself, "If you were an IRS employee and got your application, would you understand and approve it?" Would you be convinced that it was in the IRS's best interest to let you continue your business without the lien, and pay them back the money you owe? If not go back and make any necessary changes.

3. We will take it from there, if it's a good solution for you.

I can get you a release to obtain a bank loan.

I have gotten releases to pay off accounts receivable factors in the past. Currently the IRS claims that they won't do this anymore. If this will cause you to go out of business, I would file an appeal or get the Taxpayer Advocate involved, depending on the circumstances of your situation.

Lien Releases

Once the liability is fully paid, the lien is no longer valid and should be removed.

We sometimes contact the Taxpayer Advocate's office for help.

If you want a lien released because of hardship reasons, then you need to file an appeal.

We usually file appeals directly with the collection officer or ACS. If no one is assigned you can file directly with your local appeals office. Sometimes I've had appeals secretaries tell me that they can't accept an appeal unless it comes to them from collections. Don't believe it. If you are about to suffer a hardship, and you have no one in collections assigned to your case, an appeals officer will take it. I have never failed at doing this.

Removing IRS Levies

IRS levies will be removed from if you can convince the collection employee that you are taking steps to be in full compliance. This means that returns and collection statement information is being prepared and will be given to them by the agreed upon due date.

Sometimes you need to file returns and/or collection statement info before a levy is released. In a more extreme case the IRS employee might want to review the financial statement information and set up an agreement first. If that will take too much time and checks will bounce, or your about to lose a paycheck, then proving hardship to speed up the removal of levy will be necessary.

Letters And Notices

As your representative I won't ignore IRS letters, or your phone calls concerning them.

Understanding And Responding To IRS Letters And Notices

This tax relief site will give you better information about how to respond. Each letter can be found on the IRS web site. Just Google the letter or form number and select the sites you want explanations from, including the link to the IRS web site.

Please read my descriptions for each letter. Even if you didn't get that letter, the descriptions contain a sample of the useful information these letters contain. It should help you understand the IRS letters better.

Great Tax Reduction Technique

What if you get a letter from the IRS charging you additional tax based on a math error or a clerical error? How would you like to avoid paying it? Here's how... write back within 60 days and say you request an abatement under section 6213(b)(2). This may get it abated. It's worth a try. Sometimes they reassess it, but they must issue a "notice of deficiency" giving you appeal rights. Include in the letter a statement that you disagree with the additional tax and the action you want taken, such as "I disagree with the additional tax assessment because I did everything correctly and I want you to remove the taxes." Also state that if they don't remove the taxes, you are requesting that they issue a notice of deficiency so you can file an appeal. The notice of deficiency will list the changes that they made. (Often you get a correction letter that doesn't spell out why they made the changes in the first place.) Use this approach for letters involving a missing SS# (supply the number and copy of Social Security card if you have it, in your letter). Send your letter to the address they request you respond to. Never be afraid to call or write for an explanation of the letter or the adjustments being made. You may just want to pay it, or if you are contesting it, you have a better understanding of what you are contesting. If you do call for an explanation, do not give any information as to what and why you did anything! They will record it and it can be used to deny your request for abatement.

CP 11 We Changed Your Return You Have A Balance Due

This notice reflects adjustments the IRS made to your return and the effect it had on penalties and interest. If you don't agree, speak up now, usually the longer you are in the collection process the harder it is to undo things. If you don't understand why the changes were made, contact the IRS and ask. You don't have to answer questions beyond the verifying questions to prove that you are you, or make promises of when you will make payment. Just say you will call back soon after looking into the matter.

Letter 11 Final Notice Of Intent To Levy

And notice of your right to a hearing. You have 30 days to appeal. I prefer solving the case before that time and getting the R.O. to hold off on the levy. Appeals are time consuming, and still won't solve the compliance issues of filing delinquent returns, and payment issues of paying delinquent taxes. If you can't file the delinquent taxes and fill out the collection information statements within the 30 days, call the R.O. or ACS and explain your great desire to cooperate. Give them what they want, give them some answers they want, and you will probably be given more time. If not call back again. Don't give up. You are allowed to have time to resolve your case.

CP 14 - Request For Tax Payment

This is your first bill for taxes due. A nice simple request for payment. The IRS feels that you still did not pay enough to cover the liability plus interest and penalties. This letter will go to great lengths to explain the interest and penalties, and often less about why you owe money.

CP 22E

This is a change based on the result of an IRS audit examination. You don't even have to be aware of it! The IRS can and does conduct audits without your knowledge. If they think everything is O.K. then you probably will never know it happened. If not you will get a letter. You should respond with your proof for any items you want to claim are justified as staying the way you reported them. Or you can just agree to their changes. Often the reasons for the change are missing. How nice. Pull your third party payer information and see why they have different information than you. If you can't get it in time, call and find out why. You may have to make a few calls. Hang in there.

CP 71A or CP 71D - Reminder Of Balance Due

Your annual notice of what is still owed. This notice will also inform you of your "currently not collectable" status. How nice of them!

CP 90 - Final Notice Of Intent To Levy And Notice Of Right To A Hearing

As it says, they will levy. The ball is in your court to fix what is wrong. To get into compliance and work out payment arrangements. You have 30 days to appeal the notice of levy. Not any other collection action by the collection division, not the tax in the first place, just the levy. You can appeal a lien separately as a lien appeal. You can appeal a collection action with a specific appeal for that. You appeal the tax by an offer, appeal, or tax court petition. I've had cases where my client started the appeals process, only to find out they didn't understand what they were appealing exactly, so the appeal was lost. What a waste of time and money! Match your appeals properly.

CP 101 - Math Errors

This form consists of math errors they say you made computational errors, tax deposit errors, or no reply to additional information, etc. If they are wrong, correct them. If they are right, just ignore the letter.

CP 161 - Underpaid Tax

This shows the underpaid tax according to the IRS records. Pull your ROA and verify your payments and filing of returns. You will see how the IRS came up with the balance. If you owe it, pay it. Use www.eftps.gov if you are set up. Call the IRS office on the letter to resolve it. If you need to do an installment agreement or offer in compromise consult this manual.

CP 210 or CP 220 - Penalty Notice For Failure To Deposit

Check your records against the IRS. Check circular E and make sure you understand when to make your deposits, and how much they should be. You should not rely on IRS notices to tell you how often to deposit. You also must use the correct deposit method. Certain large employers must use electronic deposits and not regular bank deposits.

CP 297

See CP-90 final notice

CP 501 or CP 502 - Reminder Of Balance Due, etc.

These are initial requests before the CP-503 and CP-504 are issued. You are in notice status now. Probably no collection action yet if this is your only IRS contact. What a great time to plan for your resolution with this guide!

CP 503 - Important Immediate Action Required

If you have received this notice, it means you have ignored the initial tax bill, CP-14, they skipped the CP-501 and CP-502 notices (or you received them prior to this), or your case is back in collections after being declared "currently not collectable" for a while. If you owe for more than one tax period, you will receive this notice even if you made arrangements to make installment payments, or you have been placed in a "hardship" status. It will say on the face of it to ignore it if you have entered into an installment agreement or paid the balance. As long as you have confirmed this, then you can ignore the letter.

CP 504 - Urgent We Intend To Levy On Certain Assets

This means that you have 30 days before they will actually levy a bank account or wages, etc. If you owe for more than one tax period, you will receive one of these notices each year. You may receive this notice even if you have made arrangements to make installment payments, or you have been placed in a "hardship" status. You may get this notice at any stage of collections. It requires immediate attention. See the chapters on working your case.

CP 515 - Request For Your Tax Return

If you have received this notice, it means you have failed to file a tax return, or at least the IRS has not logged in a copy on their computer system. The type of return and tax period will be shown in the upper right corner as well as in the body of the notice. File the return as soon as possible, otherwise your case will be transferred to an audit group who will prepare the return for you, without those necessary deductions you need to lower your liability.

CP 518 - Your Tax Return Is Overdue

Well now you know. Get it prepared and sent in. If you owe more than you can pay, then prepare to deal with the collection division. Luckily you can be prepared because of this manual.

CP 521 - This Is An Installment Agreement Payment Notice

As long as you are meeting your terms of your payment plan, there is nothing else for you to do. If you've broken your agreement, even if you didn't receive this notice, take the initiative to immediately get back into your agreement.

CP 522 - Two Year Review For More Financial Statement Information

Be careful responding. If your income has gone up, your monthly payments to the IRS will probably go up too. Maybe your living expenses, especially medical, has increased too! You want to maximize deductions to offset any increase in income. If you need to lower your monthly payments, argue that too.

CP 523 - Notice Of Intent To Levy

Oops, either you defaulted on your agreement or the IRS isn't posting your payments properly. Remember the IRS must receive payment by the due date of your monthly payments. They must also receive payment by the due dates for all taxes you are liable for. Not a day late or a dollar short. In the past they used to break your agreement and levy your account. Now, they give you about a week to straighten it out. Call and get it fixed.

CP 525 - 30 Day Letter To Appeal

This comes with your audit adjustment letter. It gives you 30 days to appeal if you disagree with the adjustments. It's a good idea to prepare this appeal along with your continued arguments and give it to the auditor. This way you protect your rights if you and the auditor disagree about the changes.

CP 531 - Notice Of Deficiency

This shows how much you owe for each year, and how to dispute the adjustments. In many dispute cases you must pay first, and then file a claim for refund. Otherwise you have 90 days to file a tax court petition.

CP 566 - Initial Contact Letter On An Audit

Be glad you received it. Many audits take place without taxpayer notification. At least you get a chance up front to defend your positions. Make sure you prepare properly.

Form 668W - Wage Levy

Fill out the exemption portion so you can get the biggest paycheck. This is a very serious collection action. If you want your next full check, you need to take care of delinquent filings and information the IRS needs from you to determine a payback plan right away. Get your information together and " paint a defensible picture" of your financial situation as instructed in this manual. File any delinquent returns, and pay any current payments of estimated taxes that are delinquent (or prove that you are not required to make one by providing your estimated tax calculation). Provide this calculation anyway if your payment is less than it normally should be. Then call for an immediate levy release. Give them the name and the fax number of the person in your company whose job it is to receive wage levy releases. Your social security or retirement can be levied.

Form 668A - Levy

Same as above, except this is a one time bank or financial institution levy. Works on anyone who is holding your money. The funds are on hold for 21 days, then they are sent to the IRS collection person who sent out the levy. I have seen banks not follow the rules on the one time nature of this levy. On the back of the levy it states that this is a one time, not continuous levy. It is for funds on hand the day it is received only. I had a real estate client who had to switch jobs because his employer got a 668A levy on his commissions. None were owed. The following week he had a closing, and would receive commissions. I tried to explain to his employer that the new commissions did not have to be held for the IRS and to read the back of the levy. It's amazing how some people can be so afraid of the IRS that it clouds their common sense judgment.

Letter 692 - Request For Consideration Of Additional Findings

This comes with proposed adjustments to your tax return. It gives you courses of action. You can sign it, or request an appeal. Be careful, you usually have less than 15 days from your receipt of the letter, to take action.

Letter 1058 - Final Notice Of Intent To Levy And Notice Of Your Rights To A Hearing. Please Respond Immediately.

If you received this notice, it means you owe tax and have ignored Letter 2050. This is one the most serious collection attempt notices the IRS sends to a taxpayer owing tax. It must be responded to or you will lose appeal rights and the IRS will levy anything they can find. As always prepare a preliminary financial statement to know where you stand before contacting the IRS.

Letter 1085 - This Is A 30 Day Letter To Protest An Assessment On A 6020b

This is a 30 day letter to protest an IRS tax assessment on a 6020B, which is the IRS code for a payroll report they filled out and filed for you. Don't just accept their figures, even if they are close to the actual amounts. Your 941 payroll reports must balance to the 940, the state reports, W-2's, etc. At a minimum, you must see that the total gross wages for the year is the same for each report. Hire a professional to help you if you can't do this on your own.

Letter 1153 - Trust Fund Recovery Penalty

The remaining FICA and withholding not collected from the business is now being charged to you. Very serious. Different regions of the country rely on different court rulings to settle some disputes. Basically you must show that you didn't have authority to direct the company's funds and that you did not have knowledge of the taxes not being paid. You should send the R.O. your appeal along with your proof that you are not liable, just in case they don't agree with you. It shows that you are very serious. Many people will wait on this part until it is absolutely necessary. Sometimes R.O.'s will chase everyone who has signature authority on the bank account, any stockholder, any signer of a tax form, or listed officer, and then leave it up to you to defend yourself.

Letter 1389 - 30 Days Protest On Tax Shelter

This gives you 30 days to protest changes made to your return because of your tax shelter activity. Sign it or appeal it.

CP 2000 - We Are Proposing ChangesTo Your Return

If you received this notice, it means that you have omitted income from your return or the amount of income or expenses on your return does not match the amount reported to the IRS. The following pages will provide an explanation of the changes followed by a detailed listing of the items that were left off your return or did not match the amounts reported to the IRS. Respond immediately, with all the proof you have to sway them to your way of thinking. Do not shortcut your proof.

Letter 2050 - Please Call Us About Your Overdue Taxes Or Returns

If you received this notice, it means you owe tax and have ignored previous notices CP-504 or CP-523 or you have delinquent tax returns. You may receive this notice even if you have made arrangements to make installment payments or you have been placed in a "hardship" status. Do not call. Spend time now preparing the delinquent returns, and preparing your financial statements.

Letter 3016 - Preliminary Determination Letter

You have 30 days to appeal, if they turned down your request for innocent spouse relief. Go back and develop your arguments before calling for a new determination. If you can't get the reviewer to change to your way of thinking, then file your appeal in a timely manner.

Letter 3172 - Notice Of Federal Tax Lien And Right To A Hearing

You now have a real property lien in a particular county only. Just the county listed. Not all counties you own property in. I have had clients that sold all property they had in other counties and used this money to help them negotiate better payment plans. If the lien will cause a hardship, one acceptable to the IRS, then appeal it.

Letter 3174(P) - Notice Of Levy

Similar to letter 1058. Used when a taxpayer changes address. This needs immediate attention. You avoid levies by resolving the collection issues, or you appeal based on a hardship.

Letter 3173 - 3rd Party Contact

This letter advises taxpayers that the IRS may be contacting 3rd parties to ask questions. You can't really do anything about it. Don't worry though, your personal information will be kept confidential.

Letter 3219 - Notice Of Deficiency

Issued to a taxpayer before an assessment is made. Usually the result of an audit. If you disagree, you need to file a tax court petition within 90 days. You can file an appeal to contest it. Don't worry, if you miss the deadline for an appeal you can usually get Appeals to take the case, by filing a tax court petition. Once accepted by the IRS legal division you can call and convince them that this is really a case to be heard by Appeals.

Letter 3228 - Annual Reminder Notice

This is a notice to let you know what taxes and years you owe. This is sent yearly as long as there is an unpaid balance.

Letter 3391 - 30 Day Notification Letter

The IRS says you owe for the years stated. The letter shows you what the liability is based on. Agree to it or protest. However, if you never filed the return, then file it. Use their numbers for income and expense if you feel comfortable with them. If you just want to accept their information without filing a return, ask for a signature form so you can show you signed the return they prepared. They file an SFR (substitute for return) using the 3rd party payer information they have on file. This includes the W-2's, K-1's, 1099's, etc. filed under your tax ID number. Signing a return and having the IRS enter it on their system will start the SOL on collections. I have seen the IRS collect tax liabilities way beyond 10 years because the taxpayer never started the running of the collection statute. The statute starts when the taxpayer files a return that the IRS accepts.

Considering Writing Your Own Letter To The IRS?

If you follow my guide, you will rarely have to write a letter to the IRS, unless you are attempting to remove penalties. If you can't get someone at the IRS to take care of your requests by a due date, or if you can't confirm that your request was completed, you may want to send something in writing, certified return receipt, prior to the due date, therefore complying with a statute date that you don't want to expire.

IRS Audit

IRS Audit Advice

An IRS audit is when the IRS requests that you contact them to provide proof of deductions, income, or to consider the treatment of various items on your tax returns. Many people mistakenly think that all they need to do is to bring their receipts and other information to the revenue agent as verification. What they don't realize is that the IRS examiner is trained to ask probing questions, and to come up with reasons why your deductions are not acceptable. In fact, the professional community has complained that in an IRS audit they often do not distinguish between the questions asked in a general audit vs. a criminal investigation. You will be asked financial status questions focusing on your lifestyle, standard of living, and other elements unrelated to the items on your tax return. This is one reason why even if you have receipts, and feel that your return was prepared correctly, you could still be in jeopardy. The tax code is written in a manner that leaves a lot open to interpretation. You must meet 'purpose' tests, and other tests that even many accountants take for granted. I have personally experienced an IRS audit person denying deductions for my clients when I felt we had enough evidence to justify our position! So basically, any time the IRS requires you to prove something to them, you need the help of an experienced professional who knows what the law is and how to argue your position. The ability to represent your position and at the same time maintain a good rapport with an IRS audit person is essential. Otherwise the IRS audit person can and will make adjustments against you.

Audit Representation Before The IRS

Audits are selected based on IRS programs. One program looks for compliance and another tries to find errors. They have not examined your return yet. Are you afraid? These days, auditors tend to be nicer. They tend to be more educated than the collection officers. They do not want to send your case to the criminal division unless they have to. I have represented people who have taken phony deductions, and have left out income on their tax returns. During my career I have never had an auditor accuse my client of criminal fraud. In each case they were happy to make the adjustments and charge the taxpayer additional tax, interest and penalties.

Of course, you have to say things like....I forgot, or I guess I make an error, or I can't find the proof for the deduction. You can't say, "Oh yeah, my friend the accountant said I should put down a lot of expenses because there is less than 1% chance of being audited". There may actually be a less than 1% chance of being audited in your case, but you have to be careful not to say you 'willfully' did anything you know was wrong in the preparation of the tax return. Got it? To this day I don't know of anyone foolish enough to admit to 'willfulness'. If you follow this manual, you will have very little to fear, unless of course you can't document the items on your return and don't want to deal with the increased tax liability.

There are two main types of audits. Correspondence and face to face. If any of these produces a tax liability, then the IRS sends you an examination report. You have 30 days to appeal it. In a face to face audit, the letter will ask you to provide information to back up certain items on your return. You may have to prepare two sets of proof. One directly responding to the letter, and another proving all the other items on your return.

Audit Reconsideration

Once the audit is over, and you missed it. all is not lost. We can request an Audit Reconsideration. In many cases the IRS will open up the audit again, so that you can have a chance to present your proof for expenses, etc. An audit reconsideration may be requested if you subsequently obtain receipts you were not able to submit before.

I have represented people in audits from other states without any problems. It is not necessary, or better, for the tax payer to sit face to face with an auditor to prove your income and expenses. You should not let the auditor into your home or office to conduct the audit. As a representative, I have yet to have the IRS refuse to have me send the information by mail when I have an out of town client. Locally, I don't mind appearing with my client. We have a pretty decent audit group here in Houston.

Help Preventing An IRS Tax Audit

Triggers, Red Flags, Etc. That Increase The Odds Of Being Selected For An IRS Examination.

Exaggerated Expenses - Many common expense adjustments come from medical, travel and entertainment, meals, vehicle, office in home, and the write off of personal computers, cell phones, uniforms, rent, and contract labor. If any of these are unusually high in relation to income, it will increase your chances of an audit.

Mistakes - Don't file a sloppy, incomplete, or illegible return. The agent may become suspicious of potential criminal fraud.

Consistency - Itemized deductions such as medical, charity, employee business expense, interest, etc. all must be reasonable, and consistent with prior years.

Some Audit Proofing Tips On What Must Be Done.

Prepare your tax return. Sit back and analyze it. Is it reasonable to have spent the amount you did on your expense items, given your current amount of income? If not, document the return with a sworn notarized attached statement, explaining the validity and purpose of the expenses. Then look at the prior years tax return. Is it reasonable to go from last year's expenses and income to this years? If not, you may want to explain a few things to avoid an audit.

File An Extension Of Time To File

You should always pay your taxes when they are due, either through quarterly estimates or withholding. If you file an extension of time to file, which allows you to file by Oct 15 th, and you file right before the deadline, your chances of being audited are greatly reduced.

Willful non filing is a criminal offense, so please file your income tax return forms each year, even if you are late. Once you file your return, the statute of limitations for the IRS to audit you begins. The IRS has 3 years from the date you file or the due date of the latest extension, whichever is later.

I Received IRS Audit Letters, Or Notices In The Mail

Types Of Audits

Face To Face - For an in house or field audit, it's best to meet with the IRS at the place of business of your representative, or at the IRS. The worst place is your business or your home. It is easier to explain your return items in a face to face meeting.

Semi-Automated Compliance - Usually math errors and differences in third party reporting from the IRS's matching program will cause letters to be generated attempting to adjust your tax liability. These letters are to be responded to with evidence that there should not be an unfavorable adjustment.

Correspondence (CP 2000, for ex.) - These letters identify items in question and a request to mail documentary proof to explain why you may have under reported income or over reported your expenses. You can mail the information in or request the audit be transferred to a local area office. You can better explain things in a face to face meeting.

You must comply with an audit request, or the IRS may summons your records, personally pay a visit to your home or office, call you, or visit neighbors and ask them questions.

Please contact us if you want assistance in resolving issues questioned in any IRS correspondence letters.

Fear Of An IRS Audit Exam?

Your Best Tax Audit Defense Survival Guide

Carefully consider professional audit representation. Consider your audit adjustment exposure in relation to the CPA's, Attorney's, or Enrolled Agent's fees for representing you. If you can't find your receipts, how will you justify your expenses? Many auditors will disallow your deductions if you have missing or lost receipts. If you cannot back up the deductions you claimed, better than making up phony receipts that the auditor refuses to accept, you should discuss alternative ways of documenting acceptable evidence, with a tax representative. A good tax audit defense advocate knows that you should never admit willfulness concerning the omitting of income, and errors of deductions. Your accountant should know the secrets of what is considered acceptable receipts, invoices (proof of purchase), business purpose, rules of evidence, and what items you normally don't need receipts for.

WE DO! and you will too, when you become a customer of ours. Contact us now, for the Audit relief you deserve.

Who Gets Audited?

• Individuals who file a personal 1040 income tax return.


• Large, small, and mid size business' who file corporate 1120, partnership 1065, llcs, llps, etc. have financial audits.


• Estates, tax form 706 and trusts form 1041.


• Your retirement plan, contributions, etc.


• Any other entity who is required to file a U.S. income tax return.

How Much Time Does The Audit Process Take?

I have concluded audits in one day, though it is rare. At the other extreme, I've had audits last a year or longer. Revenue agents of the IRS will take the time they feel is necessary to conclude an audit. If the IRS feels they will get a large adjustment, decrease the odds of audit abuse, obtain public policy and other benefits, they will audit you till you stop them!

If you don't like the findings, you can speak to the manager. Then you can file an appeal with the auditor, addressed to IRS appeals. The auditor will then clean up their work papers, maybe make adjustments in your favor, and then send the appeal to the appeals division. See our section on audit appeals.

How Does A Face To Face Audit Work?

Your audit letter will list the items on your tax return that the IRS wants to examine. In my experiences I've found that it is a good idea to prepare two sets of documentary evidence. One based on the items in the letter, and another to support the rest of the return. Why? Auditors use statistical sampling guidelines. If they are not satisfied with the proof you provide, they will ask questions concerning the return as a whole. Make sure you don't get caught off guard. You need to be the most prepared possible, for your protection. Never give the auditor your original receipts. If you don't have all of your evidence with you, the auditor will draft a document request and give you 30 days to get the information. An audit adjustment report will be prepared, showing you the increase in tax, and the penalties added to it. If you decide not to present additional evidence, the audit examination report will be mailed to you with a 90 day notice of deficiency letter. This gives you the right to appeal or to go to tax court. prior to filing with IRS appeals, you can negotiate adjustments by contacting the auditor and the auditor's group manager. Often you can agree to compromise on a reasonable settlement amount.

Tax Audit Questions? Solution...

Obtain a consultation with an experienced professional that does a lot of IRS audit representation. Have your tax audit questions answered. The goal of an experienced professional is to assess your exposure, which is how much money you can potentially lose. You can then discuss what it will cost to be represented. If the costs are reasonable in relation to the potential tax that can be charged to you, obtain the representation (assuming of course that you are satisfied with that person's knowledge, personality, and experience). If you are willing to risk additional assessment, represent yourself. Do not try to bargain down the fees. You cannot predict exactly how much time it will take someone to represent you. Either do it yourself or pay for experienced IRS audit help.

Innocent Spouse Relief

Innocent Spouse Relief, Joint Returns, IRS Code 6015, Seek Professional Representation

So your spouse is responsible for the taxes and you want out. Well the IRS wants to know why you signed the return in the first place! With woman's rights increasing, the IRS loves to deny the innocence of a spouse, saying that you should know better. Yes, men can be innocent spouses too. Be prepared to answer the question, "Why didn't you read the return when you signed it? Why did you think your non-filing, non tax paying husband was going to pay the taxes on the return 'this time'!". That tends to be the main issue to resolve. Also each spouse is separately liable for the whole thing.



I had a case where the husband was responsible for 95% of the tax liability, then became ill and was out of work. His wife divorced him for abuse. I filed an offer in compromise for him and got him out of most of the taxes. The IRS went after the wife for the balance. We filed an innocent spouse claim and lost. Her attorney, who did not practice IRS representation, was good at getting the husband to sign the divorce decree stating he would be liable for the full amount of tax. The IRS won't abide by state law in these matters. The divorce degree had no effect against the IRS. In attempting to relieve the wife from the taxes, we attempted to prove that due to her medical state, education level, and the advice of her attorney, she just quickly signed the return along with other papers, not even looking at the tax balance! She figured, why bother since she wasn't going to pay it anyway. She just wanted to get the divorce over with to stop the abuse from her husband. I tried to show that she signed under duress. The IRS still insisted that she should have understood her responsibility to pay the taxes when she signs a return. Community property states may be tougher on this issue. This case went to the Taxpayer Advocate and we finally won.



My other cases were successful because I was able to show that the innocent spouse had reason to believe that the husband was going to pay the tax as he always did in the past. You must also show why you didn't elect to file a separate return. Be prepared to have the non-requesting spouse answer an IRS letter asking his side of the story, so you better make nice if you want to win your claim. Your ex is allowed to be a witness against you, even in tax court!



There are now many court decisions under the applicable code section 6015. Please look up cases to support your request when filing. Also check any updates to the code. How? By looking up the code on the IRS website and reading it.



If this gets really difficult to handle and you can't afford to hire a good representative, try to convince the Taxpayer Advocates office to help you (scream hardship), or your current R.O. Some R.O.'s are really very nice and may help you. Just don't dump it on their lap. Put together what you can and ask them to review it. Write down specific questions and ask them to answer them, so you can complete it.



Of course, if you didn't sign the return, then you are not liable. If you had income, then you always had the choice to file under the filing status of "married filing separate". Separate returns means you pay your share and he pays his. Community property states split income so that may cause a problem for the lower income spouse.

Let's Look At The Code 6015...

There are three sources of relief if you signed a joint return.



A) Code 6015(b) - A general relief rule (IRS must prove) for joint filers, even if still married (if still married, it's even harder to win your claim).



Under 6015(b)(1) you must prove that all 5 conditions are met. List them one by one and explain how they are met. I do this on all my claims under this rule. It is essential to try to show evidence, not just make statements. O.K.?

1. You filed a joint return. (A copy of the return is good.)
   
   


2. There is an understatement of tax on a joint return attributable to errors of the other spouse. A copy of the return showing a liability would qualify, or show that the liability was the result of an audit. Then show that it was from his income and deductions and not from yours.
   
   


3. Show that when you signed the return, you did not know or had reason to know of the understatement of the tax. Here is where they get you. If there was a refund or a small liability on the bottom line, or the taxes were a result of an audit, this is less difficult to prove. But if the big liability you are trying to get out of is staring at you on the bottom of the second page of the Form 1040, not far from where you put your signature, you will have a big fight from the IRS trying to prove you didn't know that the taxes were owed! Different parts of the country have different interpretations of this. It is important to do your case research. The knowledge part should be satisfied if you did not know or have reason to know at the time the return was signed, that the taxes would not be paid. You must establish that it was reasonable to believe he would pay the liability. I won a case where the therapist of the separated couple assured my client that he would pay the tax, even though he had previous tax liabilities. Given the nature of therapist and clients, it was reasonable for her to accept her therapist's professional evaluation of her husband, which included her opinion and reassurance to her that her husband would pay the taxes. The IRS accepted this.
   
   


4. It is inequitable to hold you liable for the joint tax. (Here you not only show that it is his, but show that you never benefited from the money. If he bought you fancy clothes, a new car, house etc. with the money, then the IRS will want you to pay the tax on it.)
   
   


5. You must show that you are making this claim within two years after the IRS first began collection activities. (In my experience, my clients usually think it started after it really did.

B) Code 6015(c) - Additional relief for joint filers who at the time of the election (now, that you are filing for innocent spouse)...

1. Are divorced or legally separated from the other tax return signing party
   
   


2. Or have lived apart from the other party for the preceding 12 months.

Under 6015(c) to deny the claim the IRS must prove that you had actual knowledge of the terms that gave rise to the deficiency at the time you signed the return. If you know of some of the deductions then that part will be denied but not the rest.



C) Code 6015(f) - If code 6015(b) or (c) doesn't apply you still can get relief under code 6015(f).



Here you show that even if you don't qualify under the above codes, it would be inequitable to hold you liable. You should get signed notarized statements from unrelated parties. You must satisfy all of the following conditions.

1. You filed a joint return for the year in question.
   
   


2. You don't qualify under 6020(b) or 6020(c).
   
   


3. You must file within 2 years of the first collection activity of the IRS (although this has not held up in tax court).
   
   


4. No assets were transferred between spouses as part of a fraudulent scheme.
   
   


5. The husband did not transfer disqualified assets to you. As defined in code 6015(c)(4)(B).
   
   


6. You did not have any fraudulent intent when filing, or not filing the return.
   
   


7. The liability you are requesting relief from is not from an item on the return that is yours.

In addition the following must be true...

1. You are divorced or legally separated from the other tax return signing party, Or have lived apart from the other party for the preceding 12 months.
   
   


2. On the date you signed the return, you had no knowledge or reason to know that your husband would not pay the tax liability. You must establish that it was reasonable to believe that he would pay the tax liability.
   
   


3. You will suffer an economic hardship if you don't get the relief you seek.

The IRS will consider all facts and circumstances and not just a single factor. It is very critical to develop your arguments under each category.



Innocent spouse cases are best suited for professional representation, so please consider hiring someone who has experience. Consider borrowing the money to pay the fees if necessary.

Various Correspondence We/You Will Get From The IRS, During An Innocent Spouse Case:

• A letter acknowledging receipt of the innocent spouse claim.


• A letter notifying non-requesting spouse of the preliminary decision to grant the relief.


• A questionnaire for the non-requesting spouse.


• Preliminary letter granting the relief.


• Letter notifying requesting spouse of final approval of relief.


• Preliminary letter denying relief and giving your appeal rights.


• Notice advising that requesting spouse is not entitled to relief and right to tax court.


• Letter to taxpayer with a discussion about the relief.

Delinquent Returns

Do You Have Delinquent, Unfiled, Late, Past Due, Old, Overdue, IRS Back Taxes, Or Returns?

Filing Delinquent Federal Income Tax Returns, Or Back Taxes

If you have old delinquent returns to file, the IRS can and will use the delinquent returns against you in many ways. For example, if you have a refund coming to you, and you file more than 3 years past the due date (including valid extensions) most of the time, the IRS will keep the refund. The IRS will not even offset the refund against a old tax liability from another year. If you are in a "binding" installment agreement to pay a prior tax liability, or in an uncollectible status, the filing of any return or the paying of any tax late will void the agreement. This will cause all money to become due immediately. Often when an agreement is in default, taxpayers find out via a levy on their bank account or paycheck. Even worse, taxpayers may find out through a levy on their spouses paycheck or a lien on their house and other property! Taxpayers are not always notified first about settling their past due taxes. Sometimes, even the representative was not notified! The IRS may have filed a return for you, charged you with the tax, and is now about to take collection action against you. You probably are not aware of it yet. You are about to find out the hard way! Even if you like the way they prepared the old or delinquent returns (most likely because they charged you with less back taxes than you thought it was going to be) you still need to sign the return. Otherwise, the statute of limitations on assessment does not run. This means that the IRS can audit you and/or charge you with additional taxes at any future time. Normally they have three years from the time you send a return in. Even if for some reason you are not required to file, you should file anyway. This would protect you and your accountant from having to prove that you were not required to file many years after your IRS past due returns were due!

Owing Money Due On Back Taxes And Old Delinquent Tax Returns

If you will owe money on any unfiled delinquent returns, or back tax returns, that you cannot fully pay when you send in the returns, then read Owing on the left side of the page. Your solution will involve dealing with the collections division. This applies to un filed personal 1040, payroll, 941, 940, 943, Corporation, 1120, Partnership, 1065, LLC, and other past due late business tax returns.

Solution...Delinquent Tax Return Representatives, etc.

You need to file any old back tax forms or delinquent returns immediately. Even if you are missing records, afraid that there is a possibility of owing money, confused about how to fill out the forms, or afraid to tell the IRS where you are, chances are you still need to file now. You should seek a free consultation with a professional representative who can advise you on what to do in your situation. Over the years I have collected dozens of excuses for not filing from people - most of which are not valid. Get your questions answered and put this problem of owing federal tax behind you once and for all. I will help you file previous years' returns successfully. As an unfiled return advisor, I cannot stress this enough.

Taxpayers Who Have Unfiled Tax Returns

It's very important to file and pay your taxes timely. If you don't, you will have to deal with the various attempts the IRS makes to get you to file, to file for you, and to collect the money due. You will also have to pay penalties and interest on any underpayments of tax. Not filing returns will put you in a non-filing status. After several requests, the Internal Revenue Service will attempt to summons information from you and any of your banks they have on record, so they can prepare a return for you. They may choose to bypass this step and directly file a return for you based on the information they already have.

How Many Years Back Must I file My Delinquent Tax Returns?

Usually you will have to file the previous six (6) years, plus the current year. Beyond that, you may be off the hook, depending on what years the IRS will request. We usually wait for any request before we prepare returns going back further then six (6) years, if our client wants to assume that risk. However, it is truly a great feeling to know that you have obtained back tax help, filed all missing years, and no longer have to worry about being asked to file any more years of delinquent tax returns. Often the amount of money you will owe helps in the decision to file those "extra' back years. We are available for IRS non filed tax help.

Substitute For Returns (SFR)

Reasons People Give for Not Filing Back Taxes

• I forgot or were too busy.


• I didn't know I had to file for that year.


• I am missing key records to determine our tax liability. Records such as payroll reports, W2's, 1099's, K-1's, etc.


• I lost my records from moving, a flood, fire, theft, etc.

What is your reason for not filing your federal tax returns?

IRS Actions When You don't File or Don't Report Your Income

The IRS often doesn't care what your reason is for not filing, or owing back taxes. They have improved their programs for matching 3rd party payer records with individual and businesses who have not reported that particular income source. It's better to resolve your unfiled returns before the IRS comes after you. By taking action now, you will have more time to file. After we pull the records the IRS has on you, you won't be defending why you didn't include income on your return. Mostly, you will probably avoid an audit of your old return.

When the IRS finds that the income is not reported on your return, or discovers a return is not filed, they will start sending out notices. The notices will either request that you file, or charge you with additional taxes. If you ignore the letters, or do not resolve the matter to the IRS's satisfaction, they may turn your case over to a collection officer who may call or visit you. I've never had a taxpayer tell me that the visit was a pleasant experience!

It May Take Years To Discover Delinquent Filing

Sometimes it taxes several years before the IRS notifies you that you did not file your return. This is not the situation you want. After several years pass, you may have lost vital records, and have forgotten much about your financial situation. The interest and penalties for filing and paying late may be insurmountable! Please take action now to resolve any delinquent tax return issues you have. This will minimize any non filer assistance from a CPA or Attorney you will need to help solve you past due returns.

How Substitute For Returns (SFR) Are Prepared

The SFR unit will examine and use all W2's, 1099'S, K-1's etc. that was reported to the IRS. They will probably choose the "single" filing status. The IRS will only allow deductions for your personal exemption and standard deduction (not itemized deductions). I strongly suggest that you file to preserve your deductions. What if they compute a lower liability than what you think it is? That's a tough call, it's important to know what the IRS has on you, and what visual means of expenses you had. You must know what constitutes income and what deductions you are allowed, in order to make an intelligent decision concerning accepting an IRS filed substitute for return. We can assist you with any past due tax relief you want negotiated. Email us or call 713-774-4467 for back tax help.

Collection Statute Of Limitations (SOL) - Replacing Your Returns

The good news is that the statute of Limitations on collections (10 years) does not run until after the assessment from the SFR is made. An Assessment is when the IRS or you prepare the return, then the IRS gives you your appeal rights, the time expires, and you are charged the tax. The charging of the tax to you is the assessment. Baring any extensions of the statute, such as filing a bankruptcy, offer in compromise, signing a waver, the IRS reducing the liability to a judgment, etc. the IRS will have 10 years to collect the taxes, or they must remove the liability. It's not as automatic as you thought, is it?

Despite the IRS's attempts to stop some taxpayers, returns can be filed and accepted at any time after the IRS files an SFR. You should file the return to lower the taxes they computed. If the return is over 3 years past the due date, including extensions, and no payments have been made within two years, you will not get a refund. Call our office if you need income tax help.

Criminal Charges For Not Filing Delinquent Tax Returns

Intentionally not filing your income tax return is a federal crime. Some people say it is punishable by up to $25,000 and one year in prison, for each year not filed. Many of my competitors giving back tax legal advice will try to scare you into believing that you have to have an attorney represent you to avoid these criminal charges. They may also tell you that the "attorney client privilege" is what is needed to protect your confidentiality. Then they tell you or imply that only an attorney can provide it for you. Do not believe it! After thousands of tax cases and over 25 years of IRS representation practice, I've never had a client, or potential client, who was ever even accused of a crime by the IRS criminal investigation division!

The burden of proving "willfulness" is on the IRS. You do not have to prove that you tried or wanted to file your taxes but had a good excuse for not doing so. The IRS wants people to file and pay their taxes. They are happy to assist people with full compliance of the IRS rules. It's people who speak out against the IRS and who persist in making statements concerning their desire to not file their returns, who the IRS tries to prosecute. If you are a know protester who has sent written statements to the IRS about how the laws are unconstitutional, and the IRS criminal investigation has an open file on you, then yes, you need an attorney. Not an IRS representative attorney who advertises for people with tax problems, but a good criminal lawyer who has a reputation for keeping people out of jail! Anything short of that tax need for a tax fix, call my office and we will be able to help you get back into compliance with the IRS rules on filing and paying your taxes. Many of my clients haven't filed in 10 or more years. They are in no danger of criminal charges from the IRS because of it. That's expert tax relief they won't need negotiated later on.

Problems From Not Filing & Paying Taxes

The following situations require that you file your income tax returns, or at least use those reports as information for consideration of benefits to you.

- applying for bank loans	- obtaining credit for charge cards
- applying for student loans	- getting social security
- obtaining a home loan	- getting Medicare benefits
- getting unemployment benefits	- applying for certain jobs

You must file any unfiled returns if you want to enter into a binding agreement with the IRS to pay off any taxes owed from filing backtaxes, to get an offer in compromise accepted, to have backtaxes discharged in bankruptcy, or for most other types of settlements.

Worst Tax Trouble From Not Filing Over due Returns

The IRS will take various forms of collection action, not limited to the following...

They can seize your paycheck, bank account, wages, A/R, brokerage account, retirement account, social security, and any other source of funds you are entitled to. They can seize you house, car, boat, land, and any other assets you have an equity interest in. This includes asset in business arrangements such as corporations, partnerships, trusts, llcs, etc. I've heard of revenue officers taking the stock of people's corporations, though I wouldn't let them, if you were my client. In community property states they can seize your spouse's paycheck and any other accumulations of income such as the receipt of rent, interest, royalties, etc. All this because you have a prior year tax delinquency.

Procedure For Preparing Your Overdue U.S. Income Tax Returns

Gather up the documents you have, W-2's, 1099's, K-1's, etc. (We can get them for you!)

Seek to get as many missing documents as you can.

Obtain a copy of the last return filed.

Have someone with a lot of experience prepare them. Find good tax reps like our firm.

BUT DON'T SEND THEM IN! WHY?

Because when dealing with the IRS, it's important to protect yourself from being victimized by IRS employees who feel like it is their job to punish you because of your late filing and paying of taxes. They will try to make life difficult for you. They may try to give you little time to file, not care if you overpay, and to pay more on their terms, not yours. Do you want your past due tax problem with CPA advice?

Here's How Joe Mastriano, P.C. Handles Old Return Cases.

We get a power of attorney on file with the IRS CAF (Central Authorization File) Unit. This way all employees of the IRS are supposed to contact us before they contact you.

We pull transcripts, from our computer, of the IRS record of account for several of the past years. This way we see what the IRS has on you.

We pull wage and income records to see what income was reported to them.

We decide when it's appropriate to contact the IRS and ask for a deadline and their agreement not to take collection action prior to the deadline.

We prepare your returns, or allow you to prepare them, using the information we pull from the IRS records.

Once the returns are filed by the deadline, we will work out your best solution, whether a payment plan or an offer in compromise. Maybe you just need a few months to pay in full.

We will call the IRS automatic collections or customer service to obtain the status of each delinquent year. They will give us specific mailing instructions for each year. If a revenue officer is assigned your case, they will collect the returns and forward them to the service for processing. You lose the benefit of filing them separately, but sometimes I can have you file separately, without giving them to the Revenue Officer.

Ways To File Your Delinquent Returns, Or Where To File Back Taxes

Filing Late Returns Online

You can file your past due returns on line if you choose to. I don't recommend it. People have told me that they regretted not giving themselves time to reflect on the accuracy of the return. Don't let the IRS, or any taxpayer representative bully you into filing a return so quickly that it is full of errors. This may increase your tax debt or cause an examination. In most instances I will get you the time you need.

Electronically Filing For The Refund

Too many people or so desperate for their refund, that they run to a non professionally licensed company to file for them electronically. This way they quickly get their refund, or refund anticipation loan. Please don't do this.

Hand Deliver Your Returns

This is one of the best methods. Employees of the IRS may lose your returns, and can be slow to get your returns filed in the IRS data base. Go to an IRS walk in office and get them to give you a stamped "receipt" copy of the first page of each years return. You now can prove later that you filed, and on what date.

Send Them To The SFR Unit

If you are told by collections or customer service to send certain years to an SFR unit, then that is better than the methods above for those years. Any years that you are told can be sent to the regular processing center can be sent using the above methods.

File Old Returns Separately And Certified

When you don't have a revenue officer or collections giving you a short deadline or place to file to avoid an SFR being filed, mail each return separately, a few days apart. This will get them processed easier, and bypass consideration of possible fraud. Mail each return certified, return receipt, so you have proof of filing your overdue taxes.