Thumbs Up for Proposed Changes to IRS’ Standards

The IRS recently proposed changes to its National and Local Standards for allowable living expenses and we are giving those suggested changes our endorsement. The standards are what the IRS uses to determine a taxpayer’s ability to pay a delinquent tax liability. The current standards have been in place since Feb. 1, 2006. The proposed changes for the National Standards are: Including Alaska and Hawaii in the nationwide standards, eliminating the income ranges for each expense, and adopting a new methodology for calculating miscellaneous expenses for additional persons within the household.

The proposed changes for local standards are: Expanding household expense categories to include large households instead of giving families of five or more the same standard as a family of four, including an allowance for cell phones under the category of utilities, removing the allowance for public transportation and replacing it with an allowance for a second vehicle, and including a standard for out-of-pocket health care costs.

We are excited about the these recommendations being implemented. I really believe a standard for out-of-pocket health care should and will be included when the new standards are announced. We have included $50 for these expenses in the past, however, it’s always been left to the discretion of the IRS to allow it or not. Over the years, our employees have reported that Revenue Officers have used different numbers than the current National Standards.  Hopefully, the proposed changes will help in filtering out some of the discrepancies we’ve seen in the past regarding the standards.  In the end, we’ll keep our fingers crossed that the right changes are made.

Audit team helps client out of tough bind

I received a story from one of our Audit team members that had a very happy ending.

One of our clients, a family from Pomona, CA, fell victim to an “acquaintance” who proposed the two of them open a business together using our client’s good name.  This person opened a used car business in our client’s name and did not pay taxes for almost three years.  Our client was not actively involved in the business and was not familiar with the method of paying taxes that are associated with such an endeavor.  He did not know he was in trouble until he received notice from the State of California that he owed $286,031.25! When the state began garnishing his wages, our client, a father of six, became very worried.  That’s when he came to us. 

He was thrilled that our staff was able to assign him a Case Specialist who spoke his native Spanish.  He was even more thrilled when we were able to get him an Offer in Compromise with the State of California Equalization Board for $25,000. 

Our client told his Case Specialist, “I am thankful that this nightmare is over. Finally I can start a new life with my family.

Thanks, JK Harris and Company!”  To that, I say, you are welcome!

Our commitment to customer service

Recently, I appointed Bernard Bandish to the position of Executive Vice President of Operations for JK Harris & Company, LLC. Bernard proved he deserved this appointment by managing and growing two of our sister companies — JK Harris Advisors and JK Harris Small Business Services — into successful operations. He has now added the operations staff (of 275 employees) to his list of responsibilities.

Having worked for us since 1999, Bernard is a veteran of our team and he has expansive knowledge of our systems and processes. He also has earned many coveted professional credentials, including being designated a Certified Financial Planner, a Chartered Financial Consultant and an Enrolled Agent. I am excited about what Bernard brings to our team.

Not too long after Bernard took over the reins of our operations staff, he named Kelly Scott, Director of Training and Customer Service. Kelly has been with the company almost from its inception, and I, along with Bernard, have great confidence that she will do a fantastic job in her new position.

Over the last several months, Operations has installed a team approach to assisting JK Harris customers. Customer feedback motivated us to create a specialty team concept. There are a total of eight teams with 11 to 14 Case Specialists per team.

Bernard’s staff also established our phone queue system so that Case Specialists would answer a large percentage of incoming phone calls and customer calls would not go to voice mail. The queue was designed so incoming calls would be directed to each team’s queue, and the client would get to speak to a Case Specialist from that team, even if their own Case Specialist was not available. So far, Bernard and his staff are excited about the teams consistently achieving their goals through the early stages of the program.

Lastly, Operations sent out a client survey to receive more feedback from our clients on how we can continue to make changes which will allow us to provide better service to our clients. As we get more client feedback, we will continue to revise our practices so that we can continue to raise the standard of excellence for customer service.

Praise for National Taxpayer Advocate

National Taxpayer Advocate Nina E. Olson recently released her annual report to Congress for Fiscal Year 2008. I highly commend her detailed analysis and identification of the “priority challenges and issues for the upcoming year.” I was particularly pleased to read Ms. Olson’s recommendations regarding the Offer In Compromise program.

Due to legislative changes in 2006, the IRS now requires taxpayers to put down a 20% lump payment of their offer with the submission of their OIC. As many taxpayers are unable to do this due to the lack of availability of liquid assets, Ms. Olson recommended several legislative changes regarding the Offer in Compromise program.

I must praise Ms. Olson on her recommendations to Congress. It is very important that taxpayers’ rights are protected and that taxpayers are able to submit an acceptable OIC.

You can’t win this one!

From time to time we are asked about the validity of arguments made by people who are generally called “tax protesters.” A tax protester, according to Wikipedia, “is an individual who denies the obligation to pay a tax for which the government has determined that person is liable based on a belief that the government is acting outside of its legal authority when imposing such a tax.”

What I can tell you from our own experience is that many tax protesters end up becoming our clients. They finally see that their arguments can’t hold up and they seek help to get out of the mess they have created.

I want to refer you to two different sections of the IRS’ web site (click here and click here). I think these two links will help those who might have heard or seen what tax protesters claim.

Also, the IRS has increased its fines from $500 to $5,000 per incident for any taxpayer who makes a frivolous claim concerning their taxes pursuant under IRC 6702. Hope this will help dispel some of the rumors that you may have heard or are hearing.

Hats off to our Tax Team

I wanted to share with you feedback I have received from yet another one of our satisfied clients.  It is always enlightening to hear back from our clients about their experience with JK Harris.

It is especially rewarding to hear how the negotiation of an Offer in Compromise provides relief where there was once much stress.  More often than not, the acceptance of an Offer in Compromise by the IRS allows our clients to feel as if they have gotten their life back. 

Just ask James Cooler click here of Beaufort, SC.  Cooler went for several years unable and unaware of how to make his Estimated Tax Payments on his antiques business.  The IRS filed a lien against Cooler when his tax liability had ballooned to $127,000. 

Fortunately, Cooler came to JK Harris and Company for assistance with his problems.  That assistance came in the form of an Offer in Compromise, an agreement between the IRS and the taxpayer that allows the taxpayer’s delinquent tax debt to be negotiated for less than the amount owed. 

The offered dollar amount is based on the taxpayer’s worth, plus his/her future income potential or essentially, how much the taxpayer can afford.  Cooler cooperated fully with his Case Specialist to prepare the OIC.  Once it was submitted, it took just five months to be accepted and was settled for a mere $800. 

Said Cooler, “I thank each and everyone involved in solving this problem, and I appreciate every effort made.  I would greatly recommend JK Harris to others.”  Thanks, James and we are glad we could help.

Warning: Interest Accruing on Your Tax Debt

If you visit the JK Harris web site often, you may have seen the recent press release that was sent out that discussed a recent IRS announcement which stated that there would be no changes in interest rates for the current calendar quarter. No change is good news, however, taxpayers must continue to be diligent about paying their IRS liability so those interest rates don’t become an unbearable issue.

Taxpayers must remember, interest rates are subject to change — either up or down, every quarter. The IRS compounds interest daily, so it is best to pay off your IRS liability as soon as possible to avoid the compounding and the accrual of interest. Take it from me, we see this problem a lot…The sooner you are able to pay off your liability to the IRS, the more money you will save.