How to Get Rid of IRS Liens

This article by Richard Haslow lays out a step-by-step process tax payers can utilize themselves to get rid of IRS liens once and for all. While we encourage tax payers facing IRS liens to be proactive through out the process, we continue to believe the safest approach is to use a tax representation firm that has years of experience dealing with such issues.

The IRS filed nearly 700,000 federal tax liens in 2007, according to JK Harris and Company, a national tax consulting firm. Tax liens are a seizure of personal property against individuals who do not pay taxes within a specified time. The IRS will only release the lien 30 days after full payment, if paid in cash or with a cash bond. Tax liens become public information and are reported by credit reporting agencies, seriously affecting the taxpayer’s credit score.

1. Seek professional advice. Avantri Law, a Seattle-based firm specializing in tax law, says clients should have a proactive approach by contacting a specialist before the lien is filed. The IRS notifies at-risk tax payers prior to issuing a Notice of Federal Tax Lien. Don’t assume sending a partial payment will keep them at bay. Avantri Law says that even if a partial payment covers most of the tax debt, the lien amount stays the same until the entire debt is paid in full.

2. Pick up the phone and call the IRS. Frederick W. Daily, author of the book “Stand Up to the IRS,” says that calling the telephone number listed on the letter is the best way to deal with a tax lien threat. Daily says that telling the IRS a tax lien will cause serious personal financial obstacles may reduce the changes of the lien being activated or at least influence some sympathy on the other end of the phone.

3. Appeal the tax lien notice. If the phone call didn’t go well the IRS will acknowledge a motion to appeal by filing with the IRS Appeals Office. Request a conference call with the manager of the unit filing the lien. If that request is denied, fax or mail Form 9423, a Collection Appeal Request, to the office managing the lien. A decision will be made within five days. However, Daily says that most taxpayers unfortunately lose out with this strategy.

4. Pay in full or request a partial discharge. If there is not enough cash on hand to pay in full or friends and family have balked at loaning you money, Daily says in his book that requesting a partial discharge may be option. A partial discharge, according to the Taxpayers Clinic, is the process a taxpayer goes through to offset a tax lien by selling property for cash. The proceeds from the sale are sent directly to the IRS.

5. Get a Certificate of Release of Lien. This document is issued within 30 days after the taxes are paid in full or when discharged through bankruptcy proceedings. The IRS will also issue the certificate after the statute of limitations has run out, usually 10 years after the lien was filed. If a Certificate of Release of Lien has not been received after 30 days, Daily says the taxpayer should call the IRS Centralized Lien Processing Department to investigate.

Posted by JK Harris & Company

Interest Rates Remain the Same for the First Quarter of 2010

Here is a recent news release from the IRS. It appears interest rates will remain at their near-zero levels, meaning the cost to access credit will stay low for Americans.

WASHINGTON — The Internal Revenue Service today announced that interest rates for the calendar quarter beginning January 1, 2010, will remain the same as they were in the prior quarter. The rates will be:

* four (4) percent for overpayments [three (3) percent in the case of a corporation];
* four (4) percent for underpayments;
* six (6) percent for large corporate underpayments; and
* one and one-half (1.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate during October 2009 to take effect November 1, 2009, based on daily compounding.

Revenue Ruling 2009-37, announcing the rates of interest, will appear in Internal Revenue Bulletin No. 2009-52, dated December 28, 2009.

Nearly 15,000 Taxpayers Disclose Billions in Offshore Bank Accounts

This article discusses a recent revelation that thousands of taxpayers have disclosed offshore bank accounts to the IRS in the hopes of avoiding criminal prosecution.

According to MSNBC, more than 14,700 U.S. taxpayers came forward to disclose billions in offshore bank accounts in 70 countries under a voluntary Internal Revenue Service program allowing most to avoid criminal prosecution as long as they pay what they owe, IRS officials said Tuesday.

A flood of people came forward in the last days before the amnesty program expired Oct. 15, IRS Commissioner Doug Shulman said. The final total far surpasses the number who disclose offshore accounts in a typical year — about 100 — and comes amid a broad U.S. crackdown on international tax evasion at Swiss bank UBS AG and other institutions.

“To put it simply, this is a historic milestone for the nation’s hardworking taxpayers,” Shulman said in a conference call from Washington.

The total in taxes, interest and penalties collected from those in the voluntary disclosure program will be in the “billions of dollars,” Shulman said. The disclosures involved accounts on every continent but Antarctica.

Taxpayers flocked to the amnesty program after the U.S. reached an agreement in August with the Swiss government and UBS to obtain names of 4,450 U.S. taxpayers believed to be hiding assets in secret bank accounts. Earlier this year, UBS paid a $780 million penalty under a deferred prosecution agreement filed in a Florida federal court that included disclosure of an additional 150 names. To read more click here.

Posted by JK Harris & Company

New Act Expands First-time Homebuyer Credit

Recent legislation, The Worker, Homeownership and Business Assistance Act of 2009, just passed, extended and expanded the first-time homebuyer credit allowed by previous Acts.

• Under the new law, a first-time homebuyer must buy and enter into a binding contract to buy a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. This is an extension of the previous bill, which said you must close by November 30, 2009 to claim the credit. Any qualified purchase in 2010 may be claimed on either the homebuyer’s 2009 tax return or 2010 tax return. The credit is $8,000, which is a refundable credit.

• Included in this bill, a long-time homeowner buying a replacement principal residence can claim a refundable credit of up to $6,500, ($3,250 for a married individual filing separately). To qualify for this credit, the taxpayer must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

• For homes purchased after November 6, 2009, the credit will begin to phase out for single taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 and for married filing jointly, $225,000 and $245,000. Qualifying homes purchased on or before November 6, 2009, the phase out is $75,000 to $95,000 for single taxpayers and $150,000 to $170,000 for joint filers.

Homebuyers who purchased in 2008, 2009, and 2010 may still be able to take advantage of the first-time homebuyer credit.

The credit is available under The American Recovery and Reinvestment Act of 2009 and The Worker, Homeownership and Business Assistance Act of 2009. The credit:

• Applies only to homes used as the taxpayer’s principal residence
• Reduces a taxpayer’s tax bill or increases the refund, dollar for dollar
• Is fully refundable, which means the credit will be paid out to eligible taxpayers even if they owe no tax or the credit is more than the tax owed
• Will only be refunded if no outstanding balances for prior years.

If there is a back tax debt, the credit will be applied first to the back taxes you owe and any remaining balance will be sent as a refund. This may allow some taxpayers to get their back tax debt paid off.

For homes purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within three-year period following the purchase.

JK Harris food drive to help the local community

In our particular line of work, we are particularly aware of the effects the economy is having on Americans of all walks of life. We know our clients often come to us because the tax problems they are facing are overwhelming and may potentially cause them great hardship. Wage garnishments and/or levies often cause families to struggle; we work hard to help our clients get them released so their pay isn’t affected month after month.

Recently, we wrapped up our company’s first payroll deduction campaign for Trident United Way. At the launch of the campaign, we had several guest speakers come out to speak with our employees about the charitable organizations their donations would be supporting. One that particularly touched our employees was a local neighbor of ours, Helping Hands of Goose Creek.

Helping Hands of Goose Creek provides temporary assistance to people and families who meet their stringent criteria. They provide food and personal hygiene items to people in the midst of hardship. Right now, they are working overtime to collect enough food to provide each recipient with the makings of a Thanksgiving meal. According to their director, they can never keep enough personal hygiene items (shampoo, toothpaste, toothbrushes, soap, etc.) on the shelves for all the people who need them.

Knowing the demand placed on their organization has grown and the idea of making a direct impact on our local community touched several of our employees. We started a nonperishable food drive and personal hygiene item drive to help these folks at this, the beginning of the holiday season. Many of our employees themselves have been impacted by the current economy, but it only takes a small donation – one can or box of food, to help a neighbor and our employees are reaching out to do just that.

IRS Seeks to Return $123.5 Million in Undeliverable Refunds to Taxpayers

The IRS just issued a news release detailing how they will redistribute tax refund checks that were sent to the wrong address.

The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Click here to read more.

Posted by JK Harris & Company

Oregon Tax Amnesty program drawing to a close soon

The State of Oregon is offering taxpayers tax amnesty – a chance to get caught up. Tax amnesty is an opportunity for taxpayers to file or amend tax returns in exchange for a waiver of penalty and partial interest. This program is only available to those who have not yet filed their back taxes, who already owe a tax debt and does not apply to tax year 2008.

Important things to know:

* Applications must be filed between October 1, 2009 and November 19, 2009.
* Tax returns must be filed between October 1, 2009 and January 19, 2010.

What taxes and tax periods are included?

Amnesty is available for all tax years or periods prior to 2008.

* Personal Income taxes,
* Lane and Tri-Met Transit District self-employment taxes,
* Corporate income and excise taxes, and
* Trust and estate income taxes.

Inheritance tax returns originally due before January 1, 2008. This means the date of death must have been prior to April 1, 2007.

What are the benefits of participating in tax amnesty?

* Full waiver of all penalties otherwise due under Oregon law; penalties can be more than the actual tax owed.
* Waiver of half the interest owed.

Who qualifies for tax amnesty?

* Taxpayers who have past due tax returns,
* Taxpayers who have filed returns but need to amend them.

Who does not qualify for tax amnesty?

* Taxpayers who already received a bill for tax from the department for a year they’d like to apply for amnesty.
* Taxpayers who need to file returns for
o tobacco taxes;
o employer withholding taxes; or
o tax programs not specifically stated above.

You will get amnesty if you meet all the above requirements, and:

* File an amnesty application with the Department of Revenue between October 1, 2009 and November 19, 2009. Your application must ask for amnesty on all required years.
* File your returns no later than January 19, 2010.
* Pay the entire tax liability plus one-half of the interest due.

Remember, you must write “Amnesty” across the top of all returns filed under the amnesty program. No extensions are available for the amnesty program. It would be wise to take advantage of this program while it is being offered. You will save money on interest and penalties (penalties can add up to more than the actual amount of taxes owed), while helping to alleviate the stress of knowing you have not filed your past tax returns.

Posted by JK Harris & Company