At tax time, you don't wish to end up paying the IRS too much or too little. Filling out your W-4 worksheet can be difficult, but if you adjust your tax withholding right, you will be maximizing your efficiency in paying taxes.
You might believe that a large tax refund is a good situation, but it's not. You're basically loaning the government funds less interest when you could be placing that money in a savings account that earns interest. Adding up the portions taken out of your paycheck per month becomes a considerable amount.
What you wish to accomplish when deciding on how much tax withholding you should have is to just pay exactly what you owe in taxes. Obviously, there are plenty of aspects of your tax profile that may change within the year, so it's a good idea to review and check your chosen exemptions at least once a year to ensure that your current level of tax withholding is right. A great time to do this is in the first weeks of November, so that you'll still have enough time to make any alterations prior to the end of the year. If it looks like your paycheck hasn't been withheld with ample money, this is especially important. Also, to steer clear of an IRS problem, ensure you update your tax return after you file it.
Not being able to declare someone as dependent, getting divorced, bearing a child, or getting married are some events when you must review your withholding. After any of these events, you need to seriously review your tax withholding amounts to make sure you are not overpaying or underpaying the IRS which would lead to a huge IRS issue.
You can easily steer clear of having to pay the IRS a considerable sum of money by properly filling out your W-4 worksheet. If you take the time to properly accomplish the withholding amount, it is must easier than it looks at first.
Depending on your situation, it's always best to consult with a tax professional to avoid IRS issues. You always need to review and update your W-4 form, especially if you switch to a lower or higher paying job. This will keep you on track.
Sunday, July 27, 2008
Thursday, July 24, 2008
IRS Wage Garnishment Advice
If the Internal Revenue Service serves a notification to your employer that you're under wage garnishment, the company has no choice but to take a considerable portion of your paycheck to give directly to the IRS. You will never see that money, making it as bad as it sounds.
The IRS drastically deducts a considerable 80-85% of your net pay in a wage levy. This means that you will only be taking home $200 out of $1000.
Depending on your particular situation, you may be able to get the IRS wage garnishment released. It's better to work with a tax attorney or other tax professionals who are experts in these situations and can provide quality advice.
Like with all areas of the IRS, there are very particular rules and guidelines relevant to an IRS levy being released and your wage garnishments being stopped. IRS officers who don't adhere to these guidelines face job consequences that are severe. Whether the IRS is telling you the truth that no other options are available or simply giving you the runaround can be determined by a tax professional who is experienced. Oftentimes, the IRS just does not wish to help taxpayers.
When the IRS garnishes your wages, they want to be able to collect and take from you as much money as possible and in the shortest period of time. This is each IRS officer's task. Though numerous people who work in the IRS are quite nice and polite, they all have that underlying and fundamental job characteristics which can eventually ruin your life.
There are certain things to search for in the tax attorney or tax professional who will help you with your wage garnishment situation. First, you must check their success record. Were they successful in dealing with the IRS about wage garnishments in the past? Are they familiar with the guidelines of the IRS? Your tax professional can make sure that the IRS sticks to their own guidelines and goes through the proper channels by knowing the guidelines and rules.
Lastly, do you work well with your tax attorney? You should make sure that you pick somebody you can work with comfortably. Most proceedings take time. You really want someone who you can work with comfortably, or else you will simply make things worse by having employed a tax professional who is hard to work with.
The IRS drastically deducts a considerable 80-85% of your net pay in a wage levy. This means that you will only be taking home $200 out of $1000.
Depending on your particular situation, you may be able to get the IRS wage garnishment released. It's better to work with a tax attorney or other tax professionals who are experts in these situations and can provide quality advice.
Like with all areas of the IRS, there are very particular rules and guidelines relevant to an IRS levy being released and your wage garnishments being stopped. IRS officers who don't adhere to these guidelines face job consequences that are severe. Whether the IRS is telling you the truth that no other options are available or simply giving you the runaround can be determined by a tax professional who is experienced. Oftentimes, the IRS just does not wish to help taxpayers.
When the IRS garnishes your wages, they want to be able to collect and take from you as much money as possible and in the shortest period of time. This is each IRS officer's task. Though numerous people who work in the IRS are quite nice and polite, they all have that underlying and fundamental job characteristics which can eventually ruin your life.
There are certain things to search for in the tax attorney or tax professional who will help you with your wage garnishment situation. First, you must check their success record. Were they successful in dealing with the IRS about wage garnishments in the past? Are they familiar with the guidelines of the IRS? Your tax professional can make sure that the IRS sticks to their own guidelines and goes through the proper channels by knowing the guidelines and rules.
Lastly, do you work well with your tax attorney? You should make sure that you pick somebody you can work with comfortably. Most proceedings take time. You really want someone who you can work with comfortably, or else you will simply make things worse by having employed a tax professional who is hard to work with.
Monday, July 21, 2008
Garnishment of 1099s and Wages
Because creditors take payments direct from paychecks, salary garnishment is a tough situation for people in debt. For a number of reasons, people can have their salary garnished.
When a judgment has been made the defendant, salary garnishment occurs. As a result, the defendant's paycheck is garnished. This means that to pay the plaintiff or creditor, money is directly collected from the paycheck or other income sources. Wages are garnished by these typical reasons:
*
* Debt to credit card companies.
* Child support is owed.
* Unpaid court fines.
* Unpaid taxes.
* Unpaid student loans.
* Other monetary responsibilities.
Differing from state to state, federal law maintains garnishment at twenty-five percent. Few states provide garnishments of lower amounts, while states like Texas, South and North Carolina, and Pennsylvania don't allow garnishment. If income is insufficient, there's a fixed heirarchy for garnishments to be taken: federal, then state, and lastly, credit cards.
When garnishing salary, the IRS has a procedure that has to be followed:
*
* Serve a Notice or Demand for Payment.
* Serve a Final Notice no more than 30 days prior to garnishment. These don't need to be served personally, so a lot of people don't get it and aren't aware that their salary is about to be garnished.
* Unless other settlement arrangements are decided, wages are garnished until debt is paid fully. Garnishment can't be declined.
1099 is the form that is given to freelancers, like writers, actors, and artists who are not employees of particular companies. If a company pays a freelancer $600 or more in a year, they must file a 1099 form. These go to the IRS and report income. 1099 freelancers compute taxes themselves.
If an employee has his wage garnished, the employer has the responsibility to take the settlement out of the paycheck. If the employee resigns and becomes a independent contractor or a 1099 freelancer, then the employer is obviously released from that obligation. Instead of garnishing salary from an employer, the credit can levy the contractor's accounts receivable. This means that the bank account can be levied when an independent contractor gets a check from a company.
The IRS and other creditors can freeze and seize money when a bank account is levied. Until the dues are settled, this can be done.
Having your bank account levied or your salary garnished is serious. To assist you with IRS issues, talk to seasoned lawyers such as Darrin T. Mish.
When a judgment has been made the defendant, salary garnishment occurs. As a result, the defendant's paycheck is garnished. This means that to pay the plaintiff or creditor, money is directly collected from the paycheck or other income sources. Wages are garnished by these typical reasons:
*
* Debt to credit card companies.
* Child support is owed.
* Unpaid court fines.
* Unpaid taxes.
* Unpaid student loans.
* Other monetary responsibilities.
Differing from state to state, federal law maintains garnishment at twenty-five percent. Few states provide garnishments of lower amounts, while states like Texas, South and North Carolina, and Pennsylvania don't allow garnishment. If income is insufficient, there's a fixed heirarchy for garnishments to be taken: federal, then state, and lastly, credit cards.
When garnishing salary, the IRS has a procedure that has to be followed:
*
* Serve a Notice or Demand for Payment.
* Serve a Final Notice no more than 30 days prior to garnishment. These don't need to be served personally, so a lot of people don't get it and aren't aware that their salary is about to be garnished.
* Unless other settlement arrangements are decided, wages are garnished until debt is paid fully. Garnishment can't be declined.
1099 is the form that is given to freelancers, like writers, actors, and artists who are not employees of particular companies. If a company pays a freelancer $600 or more in a year, they must file a 1099 form. These go to the IRS and report income. 1099 freelancers compute taxes themselves.
If an employee has his wage garnished, the employer has the responsibility to take the settlement out of the paycheck. If the employee resigns and becomes a independent contractor or a 1099 freelancer, then the employer is obviously released from that obligation. Instead of garnishing salary from an employer, the credit can levy the contractor's accounts receivable. This means that the bank account can be levied when an independent contractor gets a check from a company.
The IRS and other creditors can freeze and seize money when a bank account is levied. Until the dues are settled, this can be done.
Having your bank account levied or your salary garnished is serious. To assist you with IRS issues, talk to seasoned lawyers such as Darrin T. Mish.
Friday, July 18, 2008
The IRS Levy
An IRS levy is a serious consequence to many common IRS issues such as late payment of taxes. To be able to pay a taxpayer's unpaid penalty or debt, the IRS may empty bank accounts, seize property, or garnish wages with a levy. Your house, your car, retirement accounts, and even rental income may all be levied by the IRS. Upon receipt of a Levy Notice, you have to act fast to stop these financially crippling and drastic methods.
Before a Levy Notice is served, a Demand for Payment will be received. To get assistance in avoiding a levy, ask a tax lawyer and show documentation why the penalties and taxes asked from you weren't paid.
The IRS Levy Notice gives you 30 days to request a Collection Due Process hearing with the local IRS Office of Appeals. You need to prepare for the hearing if advised to do so by your tax attorney. If your taxes were paid and the IRS made a mistake by levying you, you must provide proof in the hearing. When citizens ignore the IRS Levy Notice, they become victims of unfair levies of property and wages.
The IRS is stopped from pursuing a levy by several situations. Making the IRS Office of Appeals aware of these cases is your responsibility. The IRS can't subject you to a levy if you have filed for bankruptcy. You also shouldn't be levied if you've paid the unpaid debt before or quickly following you got the Levy Notice. The statute of limitations is one loophole to stop a levy that many people do not know of. The IRS is stopped from collecting taxes assessed over ten years ago by the statute of limitations. If the tax collection period expired before the IRS served your Levy Notice, you're exempt from the levy and from settling the taxes and penalties.
The Collection Due Process hearing is also a chance to work out an installment plan for paying outstanding taxes. You'll have to work out a payment option with the Office of Appeals if you are not able to pay the entire amount of what you owe the IRS. While not the perfect choice, the installment option will be less of a financial burden than having your wages garnished or your bank account levied.
An IRS levy will go on unless it's officially released, your debt is settled, or you meet the statute of limitations and the IRS can no longer collect those taxes. If your bank account was erroneously levied as an outcome of an IRS error, the IRS will reimburse your bank fees. You should file for refund within 30 days or you will not qualify.
Your IRS issues will only worsen if you ignore a Levy Notice. To protect your assets, it is better to get quick help.
Before a Levy Notice is served, a Demand for Payment will be received. To get assistance in avoiding a levy, ask a tax lawyer and show documentation why the penalties and taxes asked from you weren't paid.
The IRS Levy Notice gives you 30 days to request a Collection Due Process hearing with the local IRS Office of Appeals. You need to prepare for the hearing if advised to do so by your tax attorney. If your taxes were paid and the IRS made a mistake by levying you, you must provide proof in the hearing. When citizens ignore the IRS Levy Notice, they become victims of unfair levies of property and wages.
The IRS is stopped from pursuing a levy by several situations. Making the IRS Office of Appeals aware of these cases is your responsibility. The IRS can't subject you to a levy if you have filed for bankruptcy. You also shouldn't be levied if you've paid the unpaid debt before or quickly following you got the Levy Notice. The statute of limitations is one loophole to stop a levy that many people do not know of. The IRS is stopped from collecting taxes assessed over ten years ago by the statute of limitations. If the tax collection period expired before the IRS served your Levy Notice, you're exempt from the levy and from settling the taxes and penalties.
The Collection Due Process hearing is also a chance to work out an installment plan for paying outstanding taxes. You'll have to work out a payment option with the Office of Appeals if you are not able to pay the entire amount of what you owe the IRS. While not the perfect choice, the installment option will be less of a financial burden than having your wages garnished or your bank account levied.
An IRS levy will go on unless it's officially released, your debt is settled, or you meet the statute of limitations and the IRS can no longer collect those taxes. If your bank account was erroneously levied as an outcome of an IRS error, the IRS will reimburse your bank fees. You should file for refund within 30 days or you will not qualify.
Your IRS issues will only worsen if you ignore a Levy Notice. To protect your assets, it is better to get quick help.
Tuesday, July 15, 2008
IRS Tax Problems and How To Address Them
The IRS wants your money as tax time draws nearer. You will find yourself overwhelmed by complex IRS issues such as tax debt and penalties. You can prevent these by consulting a Tax Specialist and using your basic knowledge on taxes.
Thousands of Americans face IRS issues every year, so you're not alone. It's often the IRS's mistaken. That's why you must be aware of your rights and your choices so you can pursue the best course of action.
Among the most common tax problems people meet is being unable to settle the amount owed in time. Documenting why you can't pay the taxes and filing an extension through the Form 4868 is the simplest fix to this issue. When taxes are not paid, heavy interest and penalties occur. If you are experiencing a financial crisis, an extension normally won't be of benefit. In this case, you have to negotiate an Installment Agreement with the IRS by filing Form 9465. The IRS is prevented from enforcing actions through property seizure or wage garnishment and you can choose the amount you can spare to pay each month if you request for an Installment Agreement.
Another common issue faced by those dealing with IRS tax issues is incurring penalties added to your tax debt. There are over 140 penalties the IRS can charge you with at will, and penalties can even be added to taxes already paid. Penalties can range anywhere from 10% to 100% of the amount owed. The IRS assesses penalties for a multitude of reasons, including mistakes on tax returns, filing late, and paying late. Fortunately, you can avoid penalty fees with several options.
The best way to deal with IRS tax issues is to employ a Tax Specialist. This specialist must be familiar with the many complex loopholes of the tax law like a lawyer, an accountant, or an ex-IRS employee. A local Tax Specialist with excellent experience and a good experience is advised.
Dealing with IRS tax problems becomes considerably easier when you know your options. You can often request a Penalty Abatement for tax penalties. Abatements are usually simpler to qualify for with the assistance of a professional Tax Specialist. But it is possible to prepare a successful Penalty Abatement Request on your own if you do your homework first. Abatements are offered for issues such as filing taxes late, paying taxes late, or not reporting income. Documented circumstances that would hinder a taxpayer like a natural disaster, a death in the family, or being hospitalized are accepted reasons. You must address a letter to the Penalty Abatement Coordinator at your local IRS Service Center to file a Penalty Abatement Request. Give proof of your excuse in the form of insurance statement, a death certificate, or a doctor's letter. You have to also attach a copy of the IRS notice informing you of the penalty.
Thousands of Americans face IRS issues every year, so you're not alone. It's often the IRS's mistaken. That's why you must be aware of your rights and your choices so you can pursue the best course of action.
Among the most common tax problems people meet is being unable to settle the amount owed in time. Documenting why you can't pay the taxes and filing an extension through the Form 4868 is the simplest fix to this issue. When taxes are not paid, heavy interest and penalties occur. If you are experiencing a financial crisis, an extension normally won't be of benefit. In this case, you have to negotiate an Installment Agreement with the IRS by filing Form 9465. The IRS is prevented from enforcing actions through property seizure or wage garnishment and you can choose the amount you can spare to pay each month if you request for an Installment Agreement.
Another common issue faced by those dealing with IRS tax issues is incurring penalties added to your tax debt. There are over 140 penalties the IRS can charge you with at will, and penalties can even be added to taxes already paid. Penalties can range anywhere from 10% to 100% of the amount owed. The IRS assesses penalties for a multitude of reasons, including mistakes on tax returns, filing late, and paying late. Fortunately, you can avoid penalty fees with several options.
The best way to deal with IRS tax issues is to employ a Tax Specialist. This specialist must be familiar with the many complex loopholes of the tax law like a lawyer, an accountant, or an ex-IRS employee. A local Tax Specialist with excellent experience and a good experience is advised.
Dealing with IRS tax problems becomes considerably easier when you know your options. You can often request a Penalty Abatement for tax penalties. Abatements are usually simpler to qualify for with the assistance of a professional Tax Specialist. But it is possible to prepare a successful Penalty Abatement Request on your own if you do your homework first. Abatements are offered for issues such as filing taxes late, paying taxes late, or not reporting income. Documented circumstances that would hinder a taxpayer like a natural disaster, a death in the family, or being hospitalized are accepted reasons. You must address a letter to the Penalty Abatement Coordinator at your local IRS Service Center to file a Penalty Abatement Request. Give proof of your excuse in the form of insurance statement, a death certificate, or a doctor's letter. You have to also attach a copy of the IRS notice informing you of the penalty.
Saturday, July 12, 2008
The IRS Cannot Tax These Types of Income
To avoid IRS problems like a smart taxpayer, you understand you shouldn't be paying less or more of what you owe the IRS in taxes. The government can't legally collect taxes on particular income types, and not many taxpayers realize this.
Since tax law does not allow it, the IRS can't tax particular types of income. Being aware of what the IRS can't tax can help you keep your money, but you should do it correctly to avoid tax issues.
One of these types of income is tax-free interest. This is income earned from instruments like state-issued bonds, or any other political entity that is entitled to freedom from federal taxes. Municipal bonds is the common name for these types of investment instruments, and the value of their tax benefit essentially increases when your marginal tax rate goes up. Basically, if your overall income goes up, the value of the bonds increases in parallel.
Making money from a car pool is another income that can't be taxed. You can exclude your car pool profits without IRS issues.
Another source of income that is excluded from taxes is selling your home. If you sell your home, you can exclude up to $250,000 in profits, $500,000 if you file a joint return with your spouse. This exclusion can be claimed every two years. If you sell your home after less than two years, you can also claim a partial exclusion. There are various restrictions, so it is best to consult a tax professional to make sure that you're doing this correctly.
Having an increased paycheck amount is not the only way of getting a raise. Your employer can cover the cost of a higher healthcare policy or a better insurance option instead, if you prefer. You won't need to deal with possible IRS issues because the IRS will not be able to tax your raise.
Since tax law does not allow it, the IRS can't tax particular types of income. Being aware of what the IRS can't tax can help you keep your money, but you should do it correctly to avoid tax issues.
One of these types of income is tax-free interest. This is income earned from instruments like state-issued bonds, or any other political entity that is entitled to freedom from federal taxes. Municipal bonds is the common name for these types of investment instruments, and the value of their tax benefit essentially increases when your marginal tax rate goes up. Basically, if your overall income goes up, the value of the bonds increases in parallel.
Making money from a car pool is another income that can't be taxed. You can exclude your car pool profits without IRS issues.
Another source of income that is excluded from taxes is selling your home. If you sell your home, you can exclude up to $250,000 in profits, $500,000 if you file a joint return with your spouse. This exclusion can be claimed every two years. If you sell your home after less than two years, you can also claim a partial exclusion. There are various restrictions, so it is best to consult a tax professional to make sure that you're doing this correctly.
Having an increased paycheck amount is not the only way of getting a raise. Your employer can cover the cost of a higher healthcare policy or a better insurance option instead, if you prefer. You won't need to deal with possible IRS issues because the IRS will not be able to tax your raise.
Wednesday, July 9, 2008
If You Make Over 100K, How Can You Keep Your Money?
You hear the argument each time. The IRS and the government tax everybody else and collect more money from the poor than they do from the rich. So that they do not need to settle any taxes, the rich are always utilizing tax loopholes. They are getting away with criminal activities!
Sometimes this is true. Tax professionals can determine tax loopholes to keep their clients' money out of the IRS's hands, and most people who earn more than $100,000 yearly can avail of their counsel. Over the years, there have really been numerous abuse. But currently, the IRS has made a move to seriously crack down on the obvious abuses of loopholes in the tax code. There's a difference between acting illegally and acting on a tax loophole if you wish to pay less to the government by decreasing tax liability. You will also end up in prison if you move illegally. For the IRS to stay away, there are some steps you must avoid and various steps you can do to safeguard yourself.
People who make over $100,000 every year pay nearly 60% of all taxes. The people within this ranger have a higher danger of being audited because the IRS focuses their effort on them. In case there's an IRS problem or audit, always keep important records to use as reference and keep your exposure to a minimum.
How they're cheating the IRS of taxes through offshore accounts are what most people like to show off about. These people usually get caught. This is because the IRS has a fraud hotline where anyone who turns in such offenders are rewarded up to 10% of the amount collected. Such offenders can get what they deserve if you keep your ears alert.
Have you ever heard of a 'secret' way to avoid paying all of your taxes, or any other such strategy which can let you not pay the IRS anything at all? The tax code is available to anyone who wishes to study it. Do you truly think there are various secrets out there? These 'secret' ways sold to people have been rejected by the IRS and in court. Not only will you face rejection, you can be penalized up to $25,000 for obviously wasting the government's effort with a frivolous tax return.
A loophole that business owners typically abuse is the deduction of business expenses. They commonly attempt to deduct personal expenses as business expenses, prompting the IRS to audit them. It is best to distinguish between business and personal expenses if you do not want IRS problems on your hands.
Sometimes this is true. Tax professionals can determine tax loopholes to keep their clients' money out of the IRS's hands, and most people who earn more than $100,000 yearly can avail of their counsel. Over the years, there have really been numerous abuse. But currently, the IRS has made a move to seriously crack down on the obvious abuses of loopholes in the tax code. There's a difference between acting illegally and acting on a tax loophole if you wish to pay less to the government by decreasing tax liability. You will also end up in prison if you move illegally. For the IRS to stay away, there are some steps you must avoid and various steps you can do to safeguard yourself.
People who make over $100,000 every year pay nearly 60% of all taxes. The people within this ranger have a higher danger of being audited because the IRS focuses their effort on them. In case there's an IRS problem or audit, always keep important records to use as reference and keep your exposure to a minimum.
How they're cheating the IRS of taxes through offshore accounts are what most people like to show off about. These people usually get caught. This is because the IRS has a fraud hotline where anyone who turns in such offenders are rewarded up to 10% of the amount collected. Such offenders can get what they deserve if you keep your ears alert.
Have you ever heard of a 'secret' way to avoid paying all of your taxes, or any other such strategy which can let you not pay the IRS anything at all? The tax code is available to anyone who wishes to study it. Do you truly think there are various secrets out there? These 'secret' ways sold to people have been rejected by the IRS and in court. Not only will you face rejection, you can be penalized up to $25,000 for obviously wasting the government's effort with a frivolous tax return.
A loophole that business owners typically abuse is the deduction of business expenses. They commonly attempt to deduct personal expenses as business expenses, prompting the IRS to audit them. It is best to distinguish between business and personal expenses if you do not want IRS problems on your hands.
Sunday, July 6, 2008
The Efficiency of the IRS's Automated Collection System
The computerized network that the IRS uses to communicate with delinquent taxpayers through the IDRS, or Integrated Data Retrieval System, is called the ACS, or Automated Collection System.
To handle the collection of taxes and to let IRS officers to communicate with taxpayers to fight the delinquent taxes IRS issue, the ACS was made in the 1980s. In order to fix the tax debt, notices, liens, or levies are provided and certain cases are scrutinized by tax examiners through this system. The system has important data on audit information and taxpayer information.
Every piece of information that is stored in the ACS is supported by other methods, like bank statements, corporate files, court records, and by contacting creditors. The system is integrated with reviews for consistency and validity.
The question remains if the ACS is an effective method to collect taxes. A recent hearing was held by congress to decide if the ACS was better than private means.
ACS is much less expensive, as emphasized by consumer tax advocates opposed to privatization. Nina Olsen, the IRS's National Taxpayer Advocate, compared the expenses of running private outsourced collections vs. ACS. Including commissions of up to 24% per amount collected, the expense of the private collection program is $12 million per year. These collectors are projected to bring in a measly $23 million in 2008, resulting in net revenues of just $11 million.
By comparison, if $7 million were invested into the Automated Collection System, then the revenues could total from $91.8 million to $145 million with no costly commissions. Olsen projects that the privatization of collection is costing the government about $81 million each year.
On the other hand, the IRS says that it has resorted to outsourcing because it cannot afford to hire more revenue officers to address the IRS issue of debt collection. The IRS is currently testing the efficacy of the private debt collection method by regaining control over certain cases that were turned over to debt collection firms and addressing them in-house. They are planning to compare the results to decide which method is more effective.
The president of the National Treasury Employees Union, or NTEU, Colleen Kelley, expressed her opinion that private debt collectors are more expensive than hiring revenue employees and puts taxpayers' details in danger.
Kelley also points to the fact that IRS employees are some of the most effective tax collectors in the United States in her opposition to the private collection of federal taxes. For instance, a debt of $100 collected by IRS officers only costs 40 cents. This was a two cent decline from 2007, in spite of a big decline in the number of IRS employees. Ms. Kelley states, "The IRS runs one of the most cost-efficient tax collection systems in the world, yet this administration insists on forging ahead with its expensive privatization scheme in spite of dismal financial results and ever-growing opposition."
As opposed to private debt collection, utilizing the ACS is more cost efficient. The government will have the chance to recoup revenues through the work of IRS employees.
To handle the collection of taxes and to let IRS officers to communicate with taxpayers to fight the delinquent taxes IRS issue, the ACS was made in the 1980s. In order to fix the tax debt, notices, liens, or levies are provided and certain cases are scrutinized by tax examiners through this system. The system has important data on audit information and taxpayer information.
Every piece of information that is stored in the ACS is supported by other methods, like bank statements, corporate files, court records, and by contacting creditors. The system is integrated with reviews for consistency and validity.
The question remains if the ACS is an effective method to collect taxes. A recent hearing was held by congress to decide if the ACS was better than private means.
ACS is much less expensive, as emphasized by consumer tax advocates opposed to privatization. Nina Olsen, the IRS's National Taxpayer Advocate, compared the expenses of running private outsourced collections vs. ACS. Including commissions of up to 24% per amount collected, the expense of the private collection program is $12 million per year. These collectors are projected to bring in a measly $23 million in 2008, resulting in net revenues of just $11 million.
By comparison, if $7 million were invested into the Automated Collection System, then the revenues could total from $91.8 million to $145 million with no costly commissions. Olsen projects that the privatization of collection is costing the government about $81 million each year.
On the other hand, the IRS says that it has resorted to outsourcing because it cannot afford to hire more revenue officers to address the IRS issue of debt collection. The IRS is currently testing the efficacy of the private debt collection method by regaining control over certain cases that were turned over to debt collection firms and addressing them in-house. They are planning to compare the results to decide which method is more effective.
The president of the National Treasury Employees Union, or NTEU, Colleen Kelley, expressed her opinion that private debt collectors are more expensive than hiring revenue employees and puts taxpayers' details in danger.
Kelley also points to the fact that IRS employees are some of the most effective tax collectors in the United States in her opposition to the private collection of federal taxes. For instance, a debt of $100 collected by IRS officers only costs 40 cents. This was a two cent decline from 2007, in spite of a big decline in the number of IRS employees. Ms. Kelley states, "The IRS runs one of the most cost-efficient tax collection systems in the world, yet this administration insists on forging ahead with its expensive privatization scheme in spite of dismal financial results and ever-growing opposition."
As opposed to private debt collection, utilizing the ACS is more cost efficient. The government will have the chance to recoup revenues through the work of IRS employees.
Thursday, July 3, 2008
Filing and IRS Bankruptcy Procedures
Bankruptcy is a scary term, and with new developments in the law, it is now also a mind-boggling construct. Sadly, it is the only choice for a lot of people. Getting a good grasp of what bankruptcy is, what the filing requisites and procedures are, and the nitty-gritty of the process is vital if you feel this is your last option out of financial mishap. Also, it is a wonderful insight to consult a Tampa tax lawyer if you plan to go on with bankruptcy filings.
First, what is bankruptcy? It is when a person or business is deemed unable to pay debts. There are three different kinds, or more legally referred to as Chapters, of bankruptcy for individuals, married or domestic partners. Let’s gloss over each Chapter.
• Chapter 7 is mostly filed by individuals or couples. Debtors have a grace period to liquidate assets to settle debts. They are allowed to keep enough to make a fresh start financially (meaning they do not have to sell everything)
• Chapter 12 is tailored-fit for family farmers or fishermen
• Chapter 13 is also referred to as “debt reorganization.” This is for people who have the ability to pay some or all of their debts. Usually, debtors are given three to five years to pay off their debts.
Small-Medium Enterprises can employ the use of Chapters 7, 11 or 15. In the first chapter, businesses are terminated as a consequence of bankruptcy. The 2nd option allows businesses to stay open while re-organizing their debts. Chapter 15 specializes on foreign debt management. Again, the importance of referring to a Tampa tax lawyer should not be taken for granted.
What is covered under bankruptcy relief? Credit card debt, professional fees, and unsecured loans are examples of debt that can be covered. Child or spousal support and some tax debts do not qualify for coverage.
Your Tampa tax lawyer can very much help you in your filing requisites especially since bankruptcy legislations were amended in 2005. The method is now more intricate. Let me to illustrate this fact through a few cases:
• A pile of documents detailing your earnings as well as expenses is required to support your filed bankruptcy.
• Debt counseling from accredited counseling agencies is needed six months before filing.
• You have to meet income requisites, which should fall along your state’s median income. Incidentally, this changes from county to county.
To check if you qualify for the requirements for Chapter 7, you can refer to the US Trustee Program of the Department of Justice or ask a qualified Tampa tax lawyer.
How do you file for bankruptcy? It is possible to do it on your own, but don’t’ forget that it is a legal process with far-reaching consequences. You may need to consult an expert who is experienced in bankruptcy laws. You decide whether you are filing for Chapter 7 or 13 and then file with the bankruptcy court. You are then provided with a trustee who is in-charge of making sure that you collect all the necessary pieces of information. Next, you advise your creditors of your decision to file for bankruptcy. They will have to discontinue their efforts of collecting money from you. As the course continues, you are required to discuss with creditors. Filing for bankruptcy is a long-and-winding process, so be willing to see it through.
Finally, what is the result of a bankruptcy claim to your income taxes or IRS standing? It depends. First, a forgiven debt is treated as a taxable income, except in the case of bankruptcy. Second, filing for one reduces the other tax benefits entitled to a debtor. Third, it creates a bankruptcy estate, which has all your assets and is considered another taxable entity when the claim is filed under Chapter 7 or 11. Consequently you have to pay taxes for this other entity.
The regulations and guidelines of bankruptcy can be very confusing. For additional information, you can check with the IRS for specific tax inquiries. You should also consult with a Tampa tax lawyer. The choice to file for bankruptcy is a huge life decision: make sure you are equipped with all the support and documentations you require to make an intelligent choice.
First, what is bankruptcy? It is when a person or business is deemed unable to pay debts. There are three different kinds, or more legally referred to as Chapters, of bankruptcy for individuals, married or domestic partners. Let’s gloss over each Chapter.
• Chapter 7 is mostly filed by individuals or couples. Debtors have a grace period to liquidate assets to settle debts. They are allowed to keep enough to make a fresh start financially (meaning they do not have to sell everything)
• Chapter 12 is tailored-fit for family farmers or fishermen
• Chapter 13 is also referred to as “debt reorganization.” This is for people who have the ability to pay some or all of their debts. Usually, debtors are given three to five years to pay off their debts.
Small-Medium Enterprises can employ the use of Chapters 7, 11 or 15. In the first chapter, businesses are terminated as a consequence of bankruptcy. The 2nd option allows businesses to stay open while re-organizing their debts. Chapter 15 specializes on foreign debt management. Again, the importance of referring to a Tampa tax lawyer should not be taken for granted.
What is covered under bankruptcy relief? Credit card debt, professional fees, and unsecured loans are examples of debt that can be covered. Child or spousal support and some tax debts do not qualify for coverage.
Your Tampa tax lawyer can very much help you in your filing requisites especially since bankruptcy legislations were amended in 2005. The method is now more intricate. Let me to illustrate this fact through a few cases:
• A pile of documents detailing your earnings as well as expenses is required to support your filed bankruptcy.
• Debt counseling from accredited counseling agencies is needed six months before filing.
• You have to meet income requisites, which should fall along your state’s median income. Incidentally, this changes from county to county.
To check if you qualify for the requirements for Chapter 7, you can refer to the US Trustee Program of the Department of Justice or ask a qualified Tampa tax lawyer.
How do you file for bankruptcy? It is possible to do it on your own, but don’t’ forget that it is a legal process with far-reaching consequences. You may need to consult an expert who is experienced in bankruptcy laws. You decide whether you are filing for Chapter 7 or 13 and then file with the bankruptcy court. You are then provided with a trustee who is in-charge of making sure that you collect all the necessary pieces of information. Next, you advise your creditors of your decision to file for bankruptcy. They will have to discontinue their efforts of collecting money from you. As the course continues, you are required to discuss with creditors. Filing for bankruptcy is a long-and-winding process, so be willing to see it through.
Finally, what is the result of a bankruptcy claim to your income taxes or IRS standing? It depends. First, a forgiven debt is treated as a taxable income, except in the case of bankruptcy. Second, filing for one reduces the other tax benefits entitled to a debtor. Third, it creates a bankruptcy estate, which has all your assets and is considered another taxable entity when the claim is filed under Chapter 7 or 11. Consequently you have to pay taxes for this other entity.
The regulations and guidelines of bankruptcy can be very confusing. For additional information, you can check with the IRS for specific tax inquiries. You should also consult with a Tampa tax lawyer. The choice to file for bankruptcy is a huge life decision: make sure you are equipped with all the support and documentations you require to make an intelligent choice.
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