by Optima Financial Group | Dec 11, 2012 | Tax Planning
How do you know if you need a tax attorney?
Tax attorneys are lawyers who specialize in the complex and technical field of tax law. According to this article from about.com, you definitely need a tax attorney if:
- You have a taxable estate, need to make complex estate planning strategies, or need to file an estate tax return.
- You are starting a business and need legal counsel about the structure and tax treatment of your company.
- You are engaging in international business and need help with contracts, tax treatment, and other legal matters.
- You plan to bring a suit against the IRS.
- You plan to seek independent review of your case before the US Tax Court.
- You are under criminal investigation by the IRS.
- You have committed tax fraud (such as claiming false deductions and credits) and need the protection of privilege.
But what if you’re already mired in tax debt and can’t afford to hire an attorney? Low Income Taxpayer Clinics (LITCs) represent low income taxpayers before the IRS and assist taxpayers in audits, appeals and collection disputes. These clinics, which are operated by nonprofit organizations or academic institutions, can also help taxpayers respond to IRS notices and correct account problems.
Another option is to seek assistance from a referral system operated by a state bar association, a state or local society of accountants or enrolled agents, or another nonprofit tax professional organization.
Debt settlement companies are not law firms and cannot provide legal advice. However, debt settlement can be a part of your solution to tax debt. Debt settlement means that your debt is negotiated down to a reduced amount and paid off in a lump sum. Settlement is a good choice if you have more debt than you can pay off within two to three years or are experiencing a financial hardship that has you falling behind on your monthly payments.
by Optima Financial Group | Dec 11, 2012 | Tax Relief Solutions
Annually, the Internal Revenue Service (IRS) reaches out to taxpayers across America who earned $49,078 or less to offer a little tax relief by way of the Earned Income Tax Credit (EITC).
The EITC varies according to your income, family size and filing status. Basically, it is a federal refund for taxpayers with low to moderate incomes. And eligible taxpayers may still get a refund even if they don’t owe taxes.
Eligible workers often miss out on it because they either don’t claim it or don’t file a tax return. This is especially true if their financial situation has changed; something that has happened to a lot of Americans over the last few years.
You can easily find out if you qualify just by visiting IRS.gov and answering a few questions using the EITC Assistant.
To get your EITC refund, you have to:
- Have had earned income through employment, self-employment or farming
- Have a valid social security number
- Be a U.S. citizen or resident alien, or a non-resident alien married to a citizen or resident alien
- Be 25 years or older
- Have investment income of less than $3,150
- Not be claimed on someone else’s tax return
- File a tax return
There are additional stipulations with regard to how you file (single or married) and whether you have filed Form 2555 (foreign income). However, in this climate of continuing financial struggle, taking the time to determine if you are eligible for some tax relief from the IRS is well worth the time investment.
And if taxes aren’t the only financial obligation that has you struggling right now; if other unsecured debt like credit cards, student loans or a car note have you wondering how you will make ends meet, take the time to ask us about debt settlement. It’s our specialty.
by Optima Financial Group | Nov 13, 2012 | Tax Relief Solutions
The IRS brings good news this week to middle-class Americans who continue to struggle with tax debt by expanding their Fresh Start Initiative.
Loosened guidelines for the Offer in Compromise program, which forgives a portion of a taxpayer’s debt, will allow more Americans to qualify as well as eliminate their tax debt in as little as two years, compared with four or five years.
The adjustments to the program come after the IRS recognizes that many taxpayers are still struggling to pay their bills. They wanted to apply a common sense approach to reflect real-world scenarios.
Changes to the program include:
- Revising the method of calculating taxpayer’s future income.
- Flexibility in repaying student loans.
- Flexibility in paying local and state delinquent taxes
- Expanding the Allowable Living Expense allowance (expenses such as credit card payments and bank fees can now be taken into account).
The changes will allow many more consumers to qualify for tax relief under the Offer in Compromise program. Specifically, when the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years.
“This phase of Fresh Start will assist some taxpayers who have faced the most financial hardships in recent years,” said IRS commissioner Doug Shulman. “It is part of our multi-year effort to help taxpayers who are struggling to make ends meet.”
The IRS, having a reputation of rigidity, surprised many Americans with this welcomed announcement of increased flexibility. Full details of the announcement are available at theIRS website.
by Optima Financial Group | Oct 5, 2012 | Tax Relief Solutions
A IRS tax levy is the toughest collection tool in the IRS arsenal. An IRS tax levy means that the government has the right to seize your property and assets in payment for unpaid tax debt. Unlike a lien, a tax levy actually gives the IRS the right to take and sell your property to settle your debt. If you have been issued a tax levy, don’t give up: you can still settle your tax debt.
There are several ways you can remove an IRS levy:
- Pay the tax debt in full. Once the debt is paid, the IRS will immediate halt the collection process. If you don’t have the funds available to pay the entire debt, options might include taking out a loan, borrowing money from friends or family, or refinancing your home. The IRS agent might be willing to put a temporary hold on collection procedures if you have a reasonable plan for coming up with the money.
- Set up a payment plan. This may be the simplest and easiest option. If you owe less than $25,000 in back taxes, the IRS will typically stop the tax levy once you have agreed to an IRS payment plan.
- Set up a partial payment plan. Similar to the installment plan, in a partial payment plan you will agree to pay the IRS what you owe over time. The main difference is that your payments will be smaller than with the installment plan and you must be able to prove that you don’t have the financial resources to make the payments required under the installment plan.
- Submit a compromise offer. If you submit an offer in compromise the IRS will automatically halt collection proceedings until the offer is reviewed. If the offer is accepted, you must pay the amount of the offer. If the offer is rejected, the IRS will resume collection proceedings unless you can set up a payment agreement.
- Prove that the levy is causing undue financial hardship. The conditions on this are stringent and the IRS is the final judge. If you can prove that the levy is making it difficult to provide for your families basic needs such as food and shelter, the IRS will lift the levy.
- Prove that the IRS is trying to collect on assets with no equity. If you can show the IRS that it’s not worth their effort to collect, the IRS may lift the levy. This would only apply in situations where you have little or no equity in your assets, such as a home with a mortgage large enough to offset the selling price.
- Let the statute of limitations expire. There is a 10 year statute of limitations on IRS tax debt. If the 10 year limit is drawing near, the IRS may try to extend the time limit by getting you to agree to a payment plan or other settlement. If you are on year nine of the ten year period however, you may be able to let the statute of limitations expire without payment.
The post How to Remove an IRS Levy appeared first on Debt America.
by Optima Financial Group | Jan 15, 2012 | Tax Planning
Don’t fall victim to tax relief scams. Learn how to spot a scam and what to do. Thousands of people fall victim to tax relief scams every year – make sure it’s not you.
Unfortunately, the Tax Relief Industry attracts circling vultures waiting to prey on those who are weakened by the threat of IRS action. You’ve probably seen the ads. You’ve heard the commercials. “Settle your tax debt for pennies on the dollar,” they claim. “We are the country’s largest tax resolution firm,” they explain. “We are a publicly traded corporation,” they proclaim. Well Enron was a very large publicly traded company as well, and they weren’t exactly trustworthy, were they? Some of these same firms have been sued by Attorney Generals for consumer fraud and theft. Others have over 1,000 complaints with the Better Business Bureau (BBB) for their tax resolution scams.
Arm yourself with the tools necessary to defend against fraudulent companies and their self-serving actions. Start by informing yourself about some of the most common tax relief scams below and learn how to protect yourself.
Top Tax Relief Scams
Tax Relief Scam #1 – Non-Refundable Upfront Payments Without Any Guarantees
The most common tax relief scam performed by these companies is to charge money upfront while promising to get results that they know are unpredictable, if not impossible, to achieve. The company may ask you to commit a very large sum of money upfront before an investigation is conducted or before the IRS side of the story is pulled (through the Master Transcript). These are the companies that are the sour apples in the industry because they are focused more on driving upfront revenue than actually helping their clients.
Tax Relief Scam #2 – Misrepresenting Potential Outcomes
Another common scam comes from aggressive salespeople who try to reel in clients by dangling anecdotal stories of ‘pennies on the dollar’ Offer in Compromise tax settlements. The reality is that very few taxpayers qualify for an Offer in Compromise (about 25% to 33% of applicants).
But the scam companies out there won’t tell you that. They may string you along and make you think you are being taken care of only to discover that, when all is said and done, you did not qualify for the Offer in Compromise. At which point the tax settlement scam company will conveniently assert that it was because the IRS did not approve it, and it was not their (the company’s) fault.
There are multiple factors the IRS considers in an Offer in Compromise application such as the taxpayer’s ability to pay, income, expenses, and asset equity. The truth is that most taxpayers don’t qualify.
When you are dealing with a new tax resolution company, ask yourself, does the company make a thorough assessment of the factors above? Do they emphasize the importance of these qualifications? Do they make it clear that an Offer in Compromise is difficult to obtain? If the answer to any of these questions is no, you may be dealing with a company who does not have your best interests in mind.
Tax Relief Scam #3 – Marketing Companies Posing as Service Providers
There are a lot of companies that advertise tax relief services but do nothing more than sell the customer’s information to other service providers.
A consumer is led to believe they are working directly with the company that’s doing the marketing, but in actuality their information will be sold to other service providers or outsourced independent contractors. The companies doing the marketing have no control over the quality of the product or the service levels given. In the worst cases, they sign up a consumer, with no intention of servicing the client whatsoever.
Information to protect against data brokers are:
- Social Security number
- First & Last Name
- Date of Birth
- Prior Year Annual Gross Income (AGI)
- Driver’s License Number
- Current City, Address, Territory, and Zip code
- Electronic Filing PIN
Tax Relief Scam #4 – The Outright Fraudsters
Unfortunately, there are some firms who have outright cheated and stolen from their clients. These are the firms that are being targeted and shut down by the Attorney Generals and who have tarnished the industry. In these cases, the unscrupulous companies will enroll many clients into a program and collect their money without providing adequate services. Some don’t even send the necessary paperwork to the IRS.
As soon as there are too many complaints or upset consumers, the company will simply change their name and start preying on consumers all over again. Adding insult to injury, many of these companies don’t provide refunds and leave people even further in debt.
Tax Relief Scam Companies Charged for Fraud in Recent Years
Tax Master’s
On March 30, 2012, Tax Master’s was ordered along with its founder, Patrick Cox, to pay $195 million on charges that it defrauded customers nationwide. A few weeks prior, the tax relief firm filed for bankruptcy “in an apparent effort to avoid the state’s enforcement action,” explained the Texas Attorney general.
Tax Master’s unlawfully misled customers about their service contract terms, failed to disclose its no-refunds policy, and falsely claimed that the firm’s employees would immediately begin work on a case – despite the fact that Tax Master’s did not actually start to work on a case until its customers paid in full for services, even if that delayed response meant taxpayers missed significant IRS deadlines.
Roni “Tax Lady” Deutch
In August 2010, former tax attorney Roni Deutch was hit with a $34 million lawsuit for allegedly defrauding thousands of customers seeking tax advice. Then California Attorney General Jerry Brown (now Governor of California) accused her of airing misleading advertisements about her services and engaging in heavy-handed sales techniques to pressure clients. Included in the allegations were charges that Deutch’s firm not only did not provide the services promised to clients but that she refused to refund fees.
An order was issued in August of 2011 prohibiting Deutch from destroying any evidence related to the case. According to the current attorney general of California, Kamala D. Harris, however, Deutch began shredding documents immediately. The attorney general’s office alleges in its complaint that Deutch shredded nearly 2,000 pounds of the firm’s documents, or about 200,000 pages the day after the order was issued.
J.K. Harris
The company has been sued by a number of U.S. Attorneys General after receiving numerous consumer complaints settlement of a class-action lawsuit that had been brought against JK Harris by the Attorneys General of 18 states, including the AG of South Carolina, home to JK Harris’ headquarters.about misleading business and advertising practices. In July 2007 a South Carolina judge approved a $6 million settlement of a class-action lawsuit that had been brought against JK Harris by the Attorneys General of 18 states, including the AG of South Carolina, home to JK Harris’ headquarters.
The suit claimed that JK Harris & Company was charging customers fees for resolving back tax debts, but then failed to deliver on their promises, and engaged in deceptive marketing and advertising practices, such as promoting that their regional offices were staffed by tax experts when they were often only sales representatives.
American Tax Relief
The FTC filed charges against American Tax Relief in September 2010. The defendants allegedly defrauded consumers out of a whopping $100 million during a short period of time in business! A summary judgement in favor of the FTC found that American Tax Relief falsely claimed they already had significantly reduced the tax debts of thousands of people and falsely told individual consumers they qualified for tax resolution programs that would significantly reduce their tax debts.
In February 2013, the defendants were found personally liable and settled the matter under an agreement with the Federal Trade Commission. The settlement order imposes a $103.3 million judgment against ATR, Hahn, and Joo HyunPark. It also imposes judgments of $18 million and $595,000, respectively, against Young Soon Park and Il Kon Park, Joo Park’s parents, who were found by the court to have received significant sums from the scheme’s earnings. The judgments will be suspended once the defendants and relief defendants have surrendered assets that total more than $15 million, including cash, a home in Beverly Hills and a condo in Los Angeles, jewelry and gold items and a 2005 Ferrari.
How to Protect Yourself
Do Your Research
Thankfully we now live in a world with Google and it’s very easy to find out if a firm is one of the good guys or bad guys. To find out if the firm you are dealing with is trustworthy just look them up through the Better Business Bureau (BBB) or other similar sites. Below are some of the best places to do your research.
1) Better Business Bureau (BBB) – www.bbb.org/us/Find-Business-Reviews
2) Rip Off Report – www.ripoffreport.com
3) Complaints.com – www.complaintsboard.com
Ask The Right Questions
Do you require upfront payments for services?
Firms that make you pay for their services upfront should be avoided. These are the most common tax relief scams. The reputable firms in this industry will be paid their fees after they have rendered their services. Some firms will include a nominal “discovery fee” for them to assign a tax professional to your case and do the research necessary to provide their recommended course of action. This is preferable to working with a firm that assesses all payments due upfront without knowing the specifics of your case.
What is your refund policy?
If you’re still considering working with a firm that is charging for their services upfront, you’ll want to at least work with a firm that has a formal refund policy. If they are not able to deliver what they claim, you’ll be able to get some or all of your money back.
Do you have any guarantees?
Ask them to put their money where their mouth is. A reputable firm will be willing to guarantee their performance.
Do you service your own clients?
Many firms are just marketing affiliates taking a cut for referring clients to larger backend companies. Ideally, you’ll want to work with a company that services their own clients with an in-house team of CPA’s and tax negotiators.
Please don’t fall for any tax relief scams. If you have an issue with the IRS, contact us today to talk to a professional tax relief advisor you can trust.
