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What Organization is Tougher Than The IRS?

by

Steven A. Leahy

What Organization is Tougher Than The IRS?

By Steven A Leahy

Remember, there are only 6 things you can do if you owe the IRS money. Before you hire someone to help you resolve your IRS problem, make sure they offer you every option possible. Many (most) tax resolution companies are not law firms – even if they have an attorney working for them. That means they can’t offer you all your options.

Let us review the six things you can do. First, you can pay the IRS everything you owe them. Second, you can set up an installment agreement with the IRS. Pay them over time. Third, you can submit an Offer-in-Compromise, to pay a lump sum to settle the debt. Fourth, you can be declared currently not collectible – prove to the IRS you don’t have any disposable income after you pay all your monthly bills. Fifth, you can file for protection under one of the Chapters of the Bankruptcy laws. And, finally, you can continue to do nothing and let the IRS have their way with you.

Sometimes, the very best option – clearly – is filing for protection under the bankruptcy code. Unless the tax resolution company you talk to is a law firm experienced in bankruptcy – and non-attorneys can never be qualified to offer you advice about bankruptcy – you may never even be exposed to that option.

Most of my clients owe the IRS a sizable amount of money – and many are what can be defined as “above-median debtors.” That means their monthly income exceeds the median (average) income for the household of the same size as the debtors’ in the same state of residence. For these taxpayers, working out a solution with the IRS can be very difficult because, often, the IRS will not allow all of their actual expenses when determining a remedy. If their mortgage is higher than the IRS allows, their payments or settlement with the IRS will be too high to allow both payments. This may force the taxpayer out of their home or cause a default with the IRS agreement.

The only organization stronger than the IRS is the Federal Court System. That is why bankruptcy is sometimes the best option. If the IRS is insisting that you give up your home, they won’t release a levy or they insist on an unreasonable monthly payment, bankruptcy may be the answer.

For example, I have an above-median couple who has a large IRS obligation, a very high mortgage payment and find themselves behind on their mortgage payments. The IRS insisted on full payment over a short period of time; a payment that would not allow them to keep their home.

Under Chapter 13, the federal bankruptcy law changes the focus of their repayment plan from repayment of the IRS debt, to keeping their home. Under their Chapter 13 plan, these taxpayers will pay their monthly mortgage, pay down the mortgage arrears and pay the IRS a small portion of the IRS claim.

I had another client who came to see me after the IRS levied his employer – leaving him with zero income. We negotiated with the IRS Revenue Officer for a time, put he would not relent and release the levy. My client was concerned that he would be evicted from his apartment if he missed his rent payment. The day he filed for protection under the bankruptcy code, the IRS was forced to release the levy, my client received his pay check, paid his rent and proposed a plan to pay his creditors over five years.

These remedies aren’t possible in many (most) tax resolution firms. Taxes under the bankruptcy laws can get very complicated. That is why it is vital that you seek help from someone who can offer all available remedies, including bankruptcy. So, if you find yourself with an IRS Problem, call Opem Tax Resolutions and The Law Office of Steven A. Leahy at 312-664-6649.

IRS Problems: Know Where You Are Before You Can Get Where You Want To Be

by

Steven A. Leahy

Find Out Where You Are So You Can Get Where You Want To Be

By Steven A Leahy

Too often clients come to see me with IRS problems and tell me how to solve their problem. When I ask, how much they owe? How old is the debt? How much is penalties? How much is interest? They don’t have an answer.

How can you know how to solve a problem, if you don’t even understand what the problem is? IRS problems are no different from any other problem. Understanding the problem goes a long way to figuring out how to solve the problem Radio and television ads always push to pay the IRS pennies on the dollars – an offer-in-compromise. So, that’s the remedy clients want. They want to pay pennies on the dollar. The problem is, an offer-in-compromise is NOT the right answer for every case. In fact, putting an offer-in-compromise forward may be exactly the wrong way to solve your IRS problem.

Begin with an Investigation

So, let’s start at the beginning. First learn exactly where you are. Only then can you chart a course to get you where you want to be. To learn where you are, my office completes an complete investigation. The investigation begins by gathering all of the information we can from the IRS. The IRS has account transcripts for every year, wage Transcripts, tax return transcripts, just to name a few. These transcripts contain lots of information about your IRS problem. At my office, we have access to a a propitiatory software package that takes all that IRS information and puts it into a form we can use to understand it.

The report will detail how much you owe; how much is penalties, and how much is interest. The report will analysis the dates of assessments, the number of tolling days, the Collection Statute Expiration Dates, and the important dates concerning the dischargability of taxes in bankruptcy. The report also provides a breakdown of every payment the taxpayer has made and how they were applied. The report will also reveal if the IRS prepared a tax return for the taxpayer (known as a Substitute for Return, or SFR) or if some returns are still unfiled.

Once we know where the IRS puts you, we gather information about your particular financial situation. We gather this information on IRS Form 433. This form collects the taxpayers income, assets, liabilities, income and expenses. Only after we have all this information can we compose a strategy to solve your IRS problems.

The Six Things You Can Do If You Owe The IRS

Remember, there are only six things you can do if you owe the IRS money. You can pay the IRS what they claim you owe. You can enter into one of several kinds of installment agreements. You can submit an Offer-in-Compromise (offer a lump sum settlement). You can have the IRS place you in a Currently not Collectible status (get the IRS to leave you alone for a time without payments). You can seek protection under the bankruptcy code. Or, finally, you can do nothing and let the IRS have their way with you.

Don’t let someone tell you they know how get you where you want to be (solve your IRS problem) – unless they know where you are now. That’s why a complete investigation is so important.

If you are facing IRS Problems, call Opem Tax Resolutions at 312-664-6649. If you mention this blog post, we will complete the first step, the IRS analysis report, for FREE.

How Long Can You Dodge the IRS? The Answer May Astound You…

by

Steven A. Leahy

How Long Can You Dodge the IRS? The Answer May Astound You…

By Steven A Leahy

Most of the taxpayers who come to see me have been playing hide-and-seek from the IRS for some time. They wonder “How long can I Dodge the IRS”? They hope the IRS will forget about them. I hear, “can I fly under their radar” a lot. The truth is – it may take some time before the IRS catches up with you. But in the end, they will find you. The IRS is like a battle ship: It may take a long time to turn on you and get you in their sites. But, once they do, the damage can be devastating.

The common scenario follows this pattern: The taxpayer owes the IRS on tax day, but doesn’t have the money to pay. The taxpayer gets VERY UPSET and SCARED. So, the taxpayer files an extension. The extension pushes the due date of the return to October 15th, typically. By filing an extension, the taxpayer feels a false sense of relief. It is false because, the taxpayer doesn’t recognize that they have already sustained a penalty for not paying any tax owed. That’s right – the extension, extends the time for filing the return, not for paying the tax. Next, as time goes by, the tax deadline gets lost in life, and goes by without notice.

The next time the taxpayer worries about their tax return is when the next tax year is upon them. The taxpayer has yet to file the previous year, and believes they have to file that year before filing the current year. So, you guessed it, as the April 15th deadline approaches, the taxpayer files another extension – Peace settles in until the next year. This is when the sleep starts to evade the taxpayer. They can bury the thought of their tax problem during the day. But, while laying in bed at night, their tax problem in all they can think of.

The IRS Has 3 Years to Audit

Did you know that the IRS has three years to audit a tax return. If you haven’t filed, they can’t audit the return. But they can file a return for you. When the IRS files a return for you, that is called a Substitute for Return, or SFR. The taxpayer may believe the IRS has forgotten about them, only to learn later (much later) that the IRS has filed the SFR and assessed a tax far in excess of what the taxpayer actually owes. So, often the IRS won’t even begin coming after you 5 years, or more, after the original return was due. This is what gives taxpayers’ with unfiled returns a feeling the IRS has forgotten them.

Now, not filing returns limits you options on resolving your IRS problem. For example, if you haven’t filed a tax return, the tax for that year will never be dischargeable in bankruptcy. That is true, even if the IRS filed an SFR for you. One more problem – if you file your tax return on time, the Collection Statute Expiration Date, or CSED, begins to tick right away.

If, however, the IRS files an SFR, the CSED begins on the date the tax is assessed, not on the date the tax was due. CSED is the time limit set on the IRS to collect a tax debt or file a complaint in court. Generally, CSED is ten years from the date of assessment. Although there are some events that may extend that date. If the IRS believes you are trying to avoid paying your taxes, they will simply file a complaint in court, obtain a judgment and seek to collect that judgment. There isn’t a time limit on collecting a judgment. That means the IRS may never go away until they are paid in full.

Dodging the IRS causes bigger problems down the line. Resolve your IRS problem today. So, if you have ANY IRS questions, Call me, Attorney Steven A. Leahy at 312-664-6649. I am the Chicago IRS Answer Man.

The IRS Tax Gap

by

Steven A. Leahy
IRS Tax Gap

By Steven A. Leahy

The IRS calculates the amount of tax liability that taxpayers do not pay on time – the difference between the true tax liability for a year and the amount that is paid on time –this calculation is defined as the IRS Tax Gap. The IRS reports the IRS tax gap every 5 years. According to the most recent IRS Tax Gap estimates (2012 for the 2006 tax year), the American public voluntarily complies with IRS regulations 83.7% of the time. To many, the compliance rate is astounding. With little or no action, only 16% of the potential tax revenue requires government action to collect. Add enforcement and late payments to that number and compliance jumps to 86.3%. These are the IRS’ own numbers.

IRS compliance rates have been steady since at least 2001. The IRS divides the IRS tax gap into three (3) components: non-filing, under-reporting, and underpayment. The biggest gap is attributed to under-reporting ($376 billion in 2006, up from $285 billion in 2001). Taxes lost due to non-filing accounted for the lowest percentage of the gap ($28 billion in 2006, $27 billion in 2001).

Compliance is highest just where you would expect – when a third party reports and/or withholds taxes. Only 1% of the IRS tax gap is attributed to this category of reporting. These numbers are also compiled from real numbers – W-2 and 1099 information. Amounts subject to little or no reporting requirements made up 56% of misreporting in 2006. But, because there isn’t any reporting, these numbers are estimates, rather than actual numbers.

While many point to the compliance rate as impressive, the IRS uses these numbers and points to the low compliance rate as proof the IRS needs to be more aggressive in their collection efforts and require additional reporting requirements to third parties. To be more aggressive, the IRS needs more money. The IRS estimates that every dollar spent on collection, the IRS receives six dollars in return.

Congress, however, has cut the IRS budget over the last several years. For 2015, Congress passed a budget that would cut the IRS enforcement by $1.2 billion dollars; almost a 10% cut. So reducing the tax gap will have to come from reporting.

You may have noticed the additional filing requirements recently implemented by the IRS. For example, the 2011 reporting year saw a new IRS form, Form 8949 “Sales and Other Dispositions of Capital Assets.” This form was designed to replace Schedule D1, and did so for 2013 and thereafter.

The change adjusts how brokers must report adjusted basis and whether any gain or loss on a sale is classified as short-term or long-term from the sale of “covered securities.” Previously, determining the basis of an asset was left to the taxpayer. These changes require additional reporting by third parties in an attempt reduce the tax gap. The IRS is always seeking new ways to require third parties to increase their reporting to decrease the chance of non-compliance.

If you need help with the IRS, you should work with a local law firm. Better, you should give me a call – Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Chicago – IRS Currently Not Collectible

by

Steven A. Leahy

Chicago: IRS Currently Not Collectible

Chicago: IRS Currently Not Collectible
What does currently non-collectible by the IRS mean to Chicago taxpayers?

There are 6 ways to get out of debt with the IRS. One of them is to be declared “currently non-collectible”.

There is an important word in that definition. And it’s the word currently.

Currently Non-Collectible means that the IRS considers that your current financial situation makes it impossible for you to pay your taxes and they determine that they can’t collect the money from you…

… at least not for now.

Which means that currently non-collectible is usually just a short-term fix for an IRS problem.

In the end you may still have to pay the taxes you owe. Plus you still may have to pay penalties and interest once your financial situation improves….

You can stay non-collectible indefinitely…

As long as your income doesn’t rise more that 15 to 20%.

However, being non-collectible at the moment doesn’t mean you get out of paying taxes going forward.

The IRS still expects what’s owed them.

In fact, you must pay these future taxes in full and on time or you’ll blow it big time. If you neglect to pay your taxes for future years, or worse – you don’t file…the whole CNC deal is off.

If this happens, the IRS will come after all of the money you owe them, and they may use garnishments, levies, seizures, liens and all of the “nasty” tactics at their disposal to get their money. If you do go for non-collectible status the IRS will put you under close scrutiny.

Chicago IRS Currently Not Collectible. If you are searching for IRS Solutions to your tax problems, or if you have ANY questions about IRS problems, we can help. call Opem Tax Resolution – The Law Office of Steven A. Leahy, PC (312) 664-6649. Call Now to schedule your FREE 1 hour Consultation!

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