The Five Biggest Mistakes Made When Filing an Offer-in-Compromise!

tax relief help, tax debt relief, tax relief, student loan consolidation, Covid-19 tax relief

The Internal Revenue Service’s (“IRS”) Offer-in-Compromise program continues to be one of the most popular programs with both practitioners and taxpayers when they are considering a way to resolve their back tax issue.  Yet, only 42% of Offers filed by taxpayers are ultimately accepted.  Why are less than half of the Offers filed being accepted? Read more about common offer in compromise mistakes.

Mistake #1: Not Checking the Statute of Limitations

There is a ten-year collection statute.  What this means is the IRS has ten years from the date it assesses the tax liability to collect that tax.  Easy enough.  However, taxpayers often do things that may toll or freeze the statute, preventing it from running.  These actions include anything that prevents the IRS from taking collection action, including:

  • Filing an Offer-in-Compromise
  • Filing bankruptcy
  • Filing a request for an installment agreement (payment plan)

Read more

IRS Tax Liens

IRS tax lien, bankruptcy and taxes, home equity loan back taxes

Anyone who has been in trouble with IRS tax debt probably has some experience with a federal tax lien. Learn about what an IRS tax lien is, how it’s filed, and what you can do to get it released. 1 How a Federal Tax Lien is Created2 Filing of a Federal Tax Lien3 Relief from a Federal … Read more

Guide to IRS Penalties

IRS Penalties, innocent spouse relief, seriously delinquent tax debt

Guide to IRS Penalties

There are many different types of penalties that the IRS can impose on individual and business taxpayers. Here are some of the more common IRS penalties.

Failure to File and Failure to Pay Penalty

Legal Authority

Legal authority for the IRS to assess penalties for failure to file and/or pay are provided by:

  1. IRC 6651 – provides for additions to tax for failure to file returns required to be filed to report tax, and for failure to pay tax required to be reported on those returns
  2. IRC 6698 provides for a penalty for failure to file a complete partnership return as required under IRC 6031.
  3. IRC 6699 provides for a penalty for failure to file a S-corporation return as required by IRC 6037.
  4. The penalty for failure to make required payments under IRC 7519(f)(4)(A).

Read more

IRS Offer-in-Compromise vs. Chapter 7 Bankruptcy

Hurricane Harvey Irma, IRS casualty loss deduction, IRS car and truck deduction, IRS coronavirus tax relief

A common misconception is that you cannot discharge federal tax debt in Chapter 7 bankruptcy. In fact you can both discharge some of your tax debts under Chapter 7 Bankruptcy, as well as settle your debts with an Offer in Compromise.

Chapter 7 Bankruptcy

Tax debt is dischargeable in Chapter 7 bankruptcy if they meet specific requirements under the Bankruptcy Code. These requirements are often called the 3-year, 2-year, and 240-day rules.

  1. The 3-year rule. The return was due at least three years ago before you file for bankruptcy. For example, Bob’s 2010 return was due on April 15, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is April 15, 2014. Note that a tax return extension will also extend the 3-year rule.
  2. The 2-year rule. The return must be filed at least two years before the bankruptcy filing. For example, Bob’s 2010 return was due on April 15, 2011, but didn’t actually file his tax return until October 31, 2011. The earliest he can file for bankruptcy for his 2010 tax debt is October 31, 2013.
  3. The taxes were assessed at least 240 days ago. For most taxpayers, the taxes are considered assessed as of the date the return was filed. However, if you file an amended return or are audited and owe additional taxes, then the 240 days on the additional tax begins to run when the additional taxes are assessed.

Read more

Business Expense 101 – Tax Deductible Car and Truck Expenses

IRS notice of deficiency, audit reconsideration

There are several different types of tax deductible car and truck expenses that individuals and business taxpayers are eligible to deduct on their return. The record-keeping requirements are the same no matter what type of tax deductible car and truck expenses you claim.

Deductible Vehicle Expenses

There are two methods of claiming car and truck expenses. You can either claim standard mileage or actual expense. The IRS standard mileage rate differs year-to-year. 

Read more

Casualty Loss Deductions

Hurricane Harvey Irma, IRS casualty loss deduction, IRS car and truck deduction, IRS coronavirus tax relief

Hurricane Harvey and Irma & IRS Casualty Loss Deduction

Casualty Loss Deduction – an Overview

Harvey Disaster Areas

In Texas : Aransas, Austin, Bastrop, Bee, Bexar, Brazoria, Burleson, Caldwell, Calhoun, Chambers, Colorado, Comal, Dallas, De Witt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kleberg, Lavaca, Lee, Liberty, Madison, Matagorda, Milam, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Augustine, San Jacinto, San Patricio, Tarrant, Travis, Tyler, Victoria, Walker, Waller, Washington, and Wharton Counties.

In Louisiana : The parishes of Acadia, Allen, Assumption, Beauregard, Calcasieu, Cameron, DeSoto, Iberia, Jefferson Davis, Lafayette, Lafourche, Natchitoches, Plaquemines, Rapides, Red River, Sabine, St. Charles, St. Mary, Vermilion and Vernon.

Read more