Wednesday

Omni-Financial Sued Over Violating No Call List |How to Stop Tax Debt Telemarketers From Calling You

*Ring *Ring..."Hello my name is blah blah, from blah blah Financial, we are calling you regarding a tax lien that has recently been filed, are you aware of that?"

That's the first call.  If you decide to humor the telemarketer be prepared for the nature of the calls to become more and more aggressive. 

If you eventually end up telling them to "take you off their list" or that you are on the no-call list (Omni-Financial was the first telemarketing company in Colorado to be fined, 2001 Court Ruling Awards Consumer Monetary Reward After Suing Omni-Financial, for calling people on the do-not-call list and apparently hasn't learned their lesson as they continue to do so FCC Warns Omni-Financial) you may still have difficulty getting rid of them.

It reminded me of a scene from the 2005 film, The 40-Year Old Virgin where Trish, played by Catherine Keener mistakes Andy, played by Steve Carell, as a telemarketer and tells him off.  The audio can be heard by playing the below video (Caution, contains NSFW language!). 







There is a whole slew of companies harassing consumers who had the misfortune of having a federal or state tax lien filed. If you are on the Do Not Call List file a complaint with the FTC and if your business is being harassed after you asked them to no longer contact you by phone I would recommend filing a complaint with the BBB.

Saturday

Costs of Representation

I find that working on a retainer is the fairest way to bill on tax representation as tax debt is analogous to lifting a rock off the ground-you never know what types of critters will be hiding underneath.  And unlike my competitors I do not over bill and only charge $175 an hour as compared to $250+ as most firms and tax attorneys charge.

The work to handle most individual income tax debt cases averages $2000, payroll tax debt for businesses average $4000.  I do allow the fees to be split up.  To keep fees low it is important to provide me with requested information in a timely fashion (i.e. not missing IRS deadlines or providing me with the information the day of our deadline).  

My Tax Preparation Fees are as follows:

*Same price regardless of filing status (i.e. single, joint, head of household, married filing
seperately, widow) *Add $100 for State Return and $150 for all prior years (prior to current year).

Base Amount and W2s Only $125
For wage earners, no schedules. Also used as the base amount for each return that does include
any schedules.

Schedule A $75
Itemizes allowable deductions against income; instead of filling out Schedule A, taxpayers may
choose to take a standard deduction of between $5,150 and $14,300, depending on age, filing
status, and whether the taxpayer and/or spouse is blind.

Schedule B $75 per page
Enumerates interest and/or dividend income, and is required if either interest or dividends
received during the tax year exceed $1,500 from all sources or if the filer had certain foreign
accounts.

Schedule C $250 per business
Lists income and expenses related to self-employment, and is used by sole proprietors.

Form 8829 $75
Expenses for Business Use of Your Home

Schedule D $75 per page
Is used to describe capital gains and losses incurred during the tax year, and to calculate the tax
amount due given the special reduced tax rates applied to capital gains and qualified (domestic)
dividends.

Schedule E $75

Is used to report income and expenses arising from the rental of real property, royalties, or from
pass-through entities (like trusts, estates, partnerships, or S corporations).

Schedule EIC $50
Is used to document a taxpayer's eligibility for the Earned Income Credit.

Schedule F $125
Is used to report income and expenses related to farming.

Schedule H $50

Is used to report taxes owed due to the employment of household help.

Schedule J $125
Is used when averaging farm income over a period of three years.

Schedule L $50
Is used to figure an increased standard deduction in certain cases.

Schedule M $50 (2009 and 2010)
Is used to claim the up to $400 "Making Work Pay" tax credit (6.2% earned income credit, up to
$400).

Schedule R $75
Is used to calculate the Credit for the Elderly or the Disabled.

Schedule SE $50
Is used to calculate the self-employment tax owed on income from self-employment (such as on a
Schedule C or Schedule F, or in a partnership).

Nicholas Hartney, E.A. 
720.491.3531

What a Successful IRS Offer in Compromise Looks Like (Proof of an Accepted Offer in Compromise, Not Just Words) $5000 settlement on over $65,000 of tax debt


This client owed over $65,000 and as you can see below the IRS settled for $5000 through their Offer in Compromise program.  This of course is not typical for every client.  The selling points for convincing the IRS to settle on this taxpayer's debt was his age (over 60), health issues (artery disease), and lack of assets and monthly disposable income.

This taxpayer had hired the now defunct Tax Masters who had him on a $100 a month payment plan after he paid them to prepare an Offer in Compromise.  I stepped in and first had the IRS drop the installment agreement (i.e. monthly payment plan), then negotiated a currently not collectible status.  After that he was able to borrow $5000 from a friend (which we noted in the Offer in Compromise) and after 8 months they finally agreed to accept the Offer.




If you need help with your back taxes please either email me nick@patriotresolution.com or call me directly at 720.491.3531

Friday

Reference and Recommendation for Nicholas Hartney, E.A.'s Services


I failed to file tax returns to the IRS for over 10 years.  Finally, this problem caught up with me and the IRS levied my bank accounts, leaving me with absolutely zero amounts in my checking and saving accounts.  More, they garnished my retirement pay by an amount that would have only left me about $300 per month from the $3,000 I usually receive.

Naturally, I was in a panic.  I had seen all the commercials on TV for tax resolution companies, but each one failed scrutiny via Google searches about complaints against them.  I didn't know what to do so I tried Googling for local tax resolution companies and found Nick Hartney's website, www.patriotresolution.com.   

I checked his company out on the Internet and couldn't find a single complaint ... I gave him a call.  

Here are the facts I've learned:

1.  You see TV commercial after TV commercial from companies promising to handle your IRS problems for "pennies on the dollar" and each is BS ... that is, unless you are in certain circumstances that only apply to a very few ... that's how they try to get away with making the "pennies on the dollar" claims

2. Nevertheless, most of the "TV commercial companies" eventually wind up being busted by the Federal Trade Commission and/or their local state attorney generals office ... such as Roni Deutch, American Tax Relief, Tax Masters and just about any other tax resolution company you see advertised on TV!

3. You're going to have to file your back tax returns and you're going to have to pay the IRS, including penalties, interest and fees ... the only questions are how can you get the back returns filed quickly and then negotiate with the IRS for how much you'll have to pay each month to enable the IRS to release bank levies, garnishments and withhold action to take your home -- that's where a tax resolution expert can help and Nick is an expert in this field

No "pie in the sky" promises; no unrealistic expectations, Nick tells you the facts and then goes to work to get your returns filed and then negotiate the best deal possible with the IRS to enable you to pay the lowest amount each month possible (that amount will be high ... but not as high as it would be if you tried this on your own!).

Nick is an honest player in a sea of dishonest big TV advertised companies.  He saved my financial life.  Plain and simple.
 
Dave C.  

Note from Nick:  Dave is one of many clients available to provide a telephone reference on demand.

Tuesday

State of Colorado Offer in Compromise Program

In order to get the State of Colorado to accept an Offer in Compromise on your back taxes you will first need the IRS to approve one for the same tax periods.  Which makes sense.  Most states will strongly consider the acceptance of an Offer in Compromise once the IRS has agreed to one for the same periods.  Taken from the Colorado Department of Revenue's site (original site: here)

Offer in Compromise of Tax Liability

Under certain circumstances the Department may accept a taxpayer's offer to settle their tax liability for less than the full amount due. Taxpayers who meet the following qualifications may initiate the process by submitting the documentation listed below. The taxpayer bears the burden of establishing the grounds for a potential settlement and has no legal entitlement to have any tax liability settled through an Offer in Compromise. Any submitted offer must reflect the taxpayer's maximum capacity to pay. The Department reserves the right to conduct an independent examination of the taxpayer's financial condition in review of the documentation submitted to determine the veracity of the information contained therein. Any previously initiated collection activity will continue while a submitted offer is being considered. The State may rescind any acceptance of an offer if the taxpayer fails to comply with the required terms and conditions, if additional information becomes available or if the information provided by the taxpayer is found to be false.


Qualifications
The Department will only consider a submitted Offer in Compromise if the following criteria are met:
  • All required tax returns have been filed through the current period.
  • The IRS has already accepted an Offer in Compromise covering the same years and liabilities.
  • The State has not previously accepted an Offer in Compromise from the taxpayer to cover prior liabilities.
  • The taxpayer has not previously received tax relief such as a tax liability discharged through bankruptcy, an innocent spouse relief or any prior settlement.
  • The taxpayer cannot be reasonably expected to satisfy all outstanding delinquencies within the period for collection as prescribed by Colorado Revised Statute 39-10-101 (2)(b).
     
Required Documentation
The following documentation must be included with the submission of an Offer in Compromise. Failure to include any of the following documentation will preclude the Department from considering the submitted OIC.
  • IRS Form 656
  • IRS Form 433 "Collection Information Statement for Wage Earners and Self-employed Individuals"
  • Verification of IRS acceptance of a submitted Offer in Compromise
  • Proof of payment for IRS Offer in Compromise
  • An IRS "Record of Account"
  • Any other relevant information pertaining to the Offer in Compromise agreement with the IRS
  • The Department's financial form "Statement of Income and Expenses" (DR 6596).
  • A written statement detailing the circumstances that warrant special consideration for an Offer in Compromise as well as the amount being offered.
  • Written disclosure of any transfer of real or personal property such as vehicles, cash or title transfer of property.
  • Written disclosure of marital and filing status.

Acceptance and Payment

If an offer of settlement is extended, the taxpayer will be notified in writing and payment must be remitted in full within 15 days from the date of notice to the taxpayer, unless specifically stated otherwise by the Department. No payment plans are allowed for less than the full taxes, penalty, and interest due. If a payment is made and the bank does not honor the check, the Department will rescind the offer in settlement and the full tax liability including penalty and interest will be due.

Any overpayment of taxes for the following three years will be retained by the Colorado Department of Revenue and applied to the tax debt. The taxpayer may not reduce quarterly estimated payments or the amount of withholding during this time.

Offer in Compromise versus Partial Payment Installment Agreements for back IRS taxes-personal and business taxes

Today I was able to negotiate a partial payment installment agreement for a couple that owes over $140,000 in back civil penalty taxes (a trust fund taxed assessed against them for an old corporation which owed back payroll taxes) for $252 a month over the next four years (the time remaining on the collection statue).  The couple makes decent money, over $7200 per month which makes this a pretty decent deal for my clients.

Although this is not considered technically an Offer in Compromise, it does allow the taxpayer to "settle" for paying approximately $12,000 on over $140,000 of tax debt, a whopping savings of over 91.5% of the total tax debt (when you consider IRS interest which is compounded daily on the civil penalty taxes-personal income tax debt also accrues penalties, but the trust fund recovery penalty in itself is a penalty so only interests accrues on the account).

Now if my client comes up with around $12,000 or even a little less (by borrowing from friends or relatives for example) we could in the future still submit a formal Offer in Compromise which would mean the IRS would be paid much sooner and the debt would be removed from their record (and thus the tax liens would be released).   Of course the taxpayer would still need to make the $252 installment agreement payment while the Offer in Compromise is being worked (a process which could last several months).

In any event, the worst case scenario due to the expiring collection statute (10 years from when the tax is assessed), in this case my clients will end up paying approximately $12,000 on over a $140,000 tax debt, or 8.5% of the total tax liability.  Not too shabby.

If you need help with back taxes give me a call at 720.491.3531 or email nick@patriotresolution.com and remember stay away from ambulance chasers calling you due to a notice of federal or state tax lien filing!

Friday

IRS Customer Service Getting Worse Per Associated Press Article Highlighting The National Taxpayer Advocate's Annual Report to Lawmakers

Watchdog: Growing IRS workload causing problems

Government watchdog: Tight IRS budget, growing workload straining agency, hurting taxpayers


WASHINGTON (AP) -- The Internal Revenue Service can't keep up with surging tax cheating and isn't sufficiently collecting revenue or helping confused taxpayers because Congress isn't giving it enough money to do its job, a government watchdog said Wednesday.

To cope with its growing and increasingly complex tasks, the agency is relying more on computer software designed to weed out fraud, Nina E. Olson, the national taxpayer advocate, said in her annual report to lawmakers.

But errors are abundant, creating even more work for the agency when taxpayers dispute its findings, the report said. In addition, it said the agency is increasingly relying on computer systems to evaluate tax returns that sometimes end up eroding taxpayers' rights, and people are having a harder time getting through to the IRS by telephone or letter, she said.

"The overriding challenge facing the IRS is that its workload has grown significantly in recent years while its funding is being cut," said Olson, an independent watchdog within the IRS. "This is causing the IRS to resort to shortcuts that undermine fundamental taxpayer rights and harm taxpayers — and at the same time reduces the IRS' ability to deliver on its core mission of raising revenue."
IRS spokeswoman Michelle Eldridge said linking tight agency budgets to supposed infringements of taxpayers' rights "is inaccurate and without basis in fact." She said the IRS has been using congressionally approved compliance programs to curb fraud and which are constantly audited to make sure people's rights are protected.

"While fewer dollars in a tight budget environment impacts elements of taxpayer service, it does nothing to erode our protection of taxpayers," she said.

By pointing her finger at the IRS budget, Olson was highlighting a politically sensitive issue. Especially in times of huge federal deficits and tight budgets, many lawmakers have shown little interest in being generous to the widely unpopular agency, which processes 141 million individual tax returns annually, including almost 120 million requests for refunds.

Congress cut the IRS budget to $11.8 billion this year. That is $300 million less than last year and $1.5 billion below the request by President Barack Obama, who argued that boosting the agency's spending would fatten tax collections and provide better service to taxpayers.
Those arguments did little to win over lawmakers.

"Like families across the country, the IRS will have to do more with less," Rep. Jo Ann Emerson, R-Mo., who heads the House Appropriations subcommittee that controls the agency's budget, said last fall.
Olson's report came just days after the IRS estimated that people and companies underpaid their taxes by a huge $385 billion last year after audits and other enforcement efforts, compared with around $2.3 trillion that the agency collected.

Olson noted that these tax collections are what make government programs possible and that the underpayment comes as lawmakers hunt for ways to pare federal deficits exceeding $1 trillion yearly.
"Yet obtaining a little extra money to bring in a lot of extra money remains an intractable challenge for the IRS, and that is unfortunate," the report said.

Underscoring the IRS' volume of work, the report said the agency contacted taxpayers 15 million times in 2010 to change their claimed tax liability. Only 1 in 10 of those contacts was considered an audit, which gives taxpayers additional rights such as the ability to go to tax court.
To cope with its growing burden, the agency is relying more frequently on computers and having less personal contact with taxpayers. As a result, the IRS is increasingly using "practices and procedures that harm taxpayers by acting on assumptions of noncompliance arrived at by automated processes that do not solicit, encourage or allow taxpayer response."

The report said the number of returns seeking refunds that the agency computer program set aside for screening for possible fraud grew by 72 percent, to 1.1 million, from 2010 to 2011.
The report said the number of bogus refund claims is growing as people submit multiple false returns via electronic filing. The growth of refundable tax credits for purchases of first homes, college costs and other expenses is also contributing to the rising number of bogus claims. Refundable credits can produce cash payments to people who owe no taxes, making them enticing targets for fraud.
Olson's report said the IRS handled more than 226,000 cases claiming identity fraud in 2011, a 20 percent increase over 2010. Thieves often request refunds by using the Social Security number of a person they falsely claim as a relative, frequently early in the filing season before the actual taxpayer files his or her return.

Though the overall rate of fraud remains relatively low, Olson said in an interview, "you want to make sure you're not abusing the taxpayers by letting dollars go out the door." Otherwise, she said, "taxpayers are going to get disgusted" and lose faith in the tax system.
In one measure of errors the agency is making, Olson's bureau received 21,000 complaints from taxpayers last year after the IRS blocked requested refunds because it suspected fraud. Three in four of them eventually qualified for the money. Those refunds averaged $5,600 and it typically took six months for taxpayers to receive them.

In addition, the IRS corrected 10.6 million discrepancies in taxpayers' returns in 2010 that it considered mathematical errors, more than double the 4 million corrected discrepancies in 2005, the report said. But the IRS itself made some errors. On 300,000 returns on which it disallowed exemptions for dependent children, it later had to restore the exemption just over half the time.
The report said that at the end of last year, it took the agency more than six weeks to answer nearly half of taxpayers' letters and faxes dealing with adjustments to their returns. The agency does not accept emails from taxpayers, Olson said. The report also said that between 2004 and last year, the portion of phone calls from taxpayers the IRS answered fell from 87 percent to 70 percent.
"Few government agencies or businesses would be satisfied if their customer service departments were unable to answer three out of every 10 calls," the report said.
Further complicating the IRS' task are constant changes to the 3.8 million-word tax code. Over the previous decade, 4,428 changes have been made to it, including an estimated 579 changes in 2010.

Tuesday

IRS Tax Lien Certificate of Discharge | Converting Your Business Entity to Save Thousands in Penalties, Interest and Principal Tax


The best way to obtain relief from a large tax debt on your business is to reorganize into another entity. This taxpayer owes nearly $70,000 however I was able to have the IRS agree to release the assets of the business to use in another business entity for $7231.  This startegy commonly referred to in the tax resolution industry as a "new-co" or new company formation will provide you with the most bang for your buck.  

This strategy works if the assets in your business (including accounts receivable) are significantly lower than your federal tax debt.  I have represented hundreds of taxpayers using this resolution strategy.  My fee for a new entity start-up range from $2000 to $5000 depending on the size of trust fund portion of the payroll tax.  Contact me if interested at 720.340.4065.