JK Harris helps end back tax debt for client in Tennessee

Recently a client from Tennessee came to us with a burden she could no longer bear. She and her former spouse had taken out a distribution from their life insurance policy to help pay their living expenses. What they didn’t realize was that one move bumped them up into a higher tax bracket. This in turn triggered a tax liability for the year that they were unable to pay.

Our client tried making arrangements with the IRS and set up an installment payment plan. She tried to repay her debt in full, but she just didn’t make enough money. Now a single mom, she didn’t have the means to repay the tax debt she had incurred. Then, she came to JK Harris.

Our tax team analyzed her financial situation and determined she was a candidate for an Offer in Compromise. We prepared the Offer package and after several months of waiting to hear back from the IRS, when we did – the news was good. Ms. Capps had her offer in compromise accepted at a fraction of what she owed.

“I am very thankful to you,” Ms. Capps said in the letter she wrote to her case specialist.

We were glad to help – and wish you all the best in the future!

Ten Tax Benefits for Parents

From the IRS Newsroom

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

1. Dependents In most cases, a child can be claimed as a dependent in the year they were born. For more information see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

2. Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see IRS Publication 972, Child Tax Credit.

3. Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work. For more information see IRS Publication 503, Child and Dependent Care Expenses.

4. Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.

5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included. For more information see the instructions for IRS Form 8839, Qualified Adoption Expenses.

6. Children with Earned Income If your child has income earned from working they may be required to file a tax return. For more information see IRS Publication 501.

7. Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate. For more information see IRS Publication 929, Tax Rules for Children and Dependents.

8. Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income. For more information see IRS Publication 970, Tax Benefits for Education.

9. Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions. For more information see IRS Publication 970.

10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent. For more information see the IRS website.

The forms and publications on these topics can be found at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

National Taxpayer Advocate releases annual report to Congress

Last week, National Taxpayer Advocate Nina Olson released her annual report to Congress detailing the need for reform within certain parts of the IRS. Again this year, Ms. Olson has listed the need for tax reform as the number one priority for the IRS. She expressed concern over the IRS’ continued use of tax liens and the lack of alternative collections methods.

Ms. Olson’s report stated more than 1.1 million taxpayers had tax liens filed against them by the IRS in Fiscal Year 2010. Tax liens can be financially devastating to a taxpayer since the lien shows up on their credit report and will linger for seven years after the tax liability is paid. Once a taxpayer has a tax lien on their credit report, it can affect their ability to gain housing (owned or rented), employment, and can affect their ability to get affordable loans and insurance.

In the industry, we have seen an increased number of tax liens being filed and Ms. Olson’s report confirmed it. The NTA report states that tax lien filings have increased 550 percent in the past ten years.

You can view the JK Harris official press release on this issue at Expert Click.

JK Harris Helps Albuquerque Client Save ‘A Bundle’

We recently received an enthusiastic testimonial from a client in Albuquerque, New Mexico. Tina Driver came to JK Harris for help after cashing out a 401K when she lost her job. Although she specifically asked the investment firm to withhold all taxes and penalties, she later found out they only withheld the penalties. When she saw the size of her tax bill, she knew without a job, she did not have the means to pay her back tax debt.

“Needless to say, I owed a bundle,” said Driver. “The penalties and interest alone were close to $60,000. I had no hope of ever repaying that amount.”

Our tax team went to work analyzing Ms. Driver’s situation to determine what she would be able to pay and which IRS resolution programs she might qualify for. The team determined she was a likely candidate for the Offer in Compromise (OIC) program. This program allows a taxpayer to resolve their tax liability by paying less than they owe, although they must meet the IRS’ rigid criteria to qualify for the program.

JK Harris was able to negotiate a deal for Ms. Driver, saving her over $48,000 in penalties and interest.

“JK Harris held my hand through the whole ordeal,” said Driver. “Thanks to JK Harris, I got my life back. I have and will continue to recommend JK Harris!”

JK Harris Helps Couple Get Out From Under Tax Debt in Fresno, CA

Recently we had a Fresno couple come to us when they could not figure out how to resolve their tax debt. They didn’t understand how they could have a back tax debt when they had been sending in tax returns. For most folks, filing your tax return and paying your taxes on time keeps you in good standing with the IRS.

Santiago and Judy De Leon were at a loss however when they received an IRS notice showing they owed the IRS back taxes. They turned to JK Harris to help them with their tax problem.

According to the case specialist who worked on the De Leons’ case, the couple got into tax trouble because Mrs. De Leon should have been filing quarterly tax returns and paying any taxes owed on a quarterly basis. When the IRS’ systems compared the De Leons’ returns to the W-2s and 1099s received, the discrepancy was found. The system determined Mrs. De Leon was not paying enough in to cover her tax liability. Because the IRS took a few years to catch up with her, the IRS was now asking for $14,991 – a sum she and her retired husband could not afford to pay.

The De Leons worked with a JK Harris case specialist to get an offer in compromise submitted to the IRS. An Offer in Compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle, or “compromise” federal tax liabilities by accepting less than full payment under certain circumstances. Generally, the process can take anywhere from a few months up to two years. It also requires – in many cases – reams of paperwork from the taxpayer showing their financial situation. The IRS requires this paperwork to determine whether or not the taxpayer has the financial ability – or inability – to repay their back tax debt.

The IRS accepted the De Leons’ offer of $2,334 saving the couple $12,657.
“We are very pleased and also very glad we found JK Harris and Company to help us with the IRS,” said Mrs. De Leon. “We would recommend JK Harris.”

We are just as pleased to have been able to help the De Leons.

Got tax questions?

At JK Harris & Company, we know taxes. We also know taxes are a painful subject for many people. Whether you are behind in paying your taxes or not, taxes can be difficult to understand, they change every year, and frankly, many people would rather not deal with them. From our participation in answering questions on Yahoo Answers, particularly as April 15th approaches each year, we certainly know that taxes are a subject that brings on a whole lot of questions.

A few months back, I sat down to review some of the more common questions we have received over the years. I then answered some of these questions in a short series of videos which can be found on the JK Harris YouTube Channel. In these videos, I discuss several topics, including: why you should or should not set up your own payment plan or installment agreement with the IRS or state tax authorities, who can represent you before the state or the IRS, what exactly an offer in compromise is, and more. It is my hope that some of these short videos can provide answers to some of the tax questions you may have.

Got tax questions of your own? Are there any tax topics I didn’t cover that you would like to see answered? I am looking for your tax questions! While I cannot get into personal tax issues or give detailed advice in each case, I would be happy to answer more general questions on back tax issues, resolution options, IRS correspondence, etc. You can send me your tax questions by either responding to this blog entry or by sending them to my email address at jkharris@jkharris.com. Please be sure to put “Blog Question” in the subject line.

Our business was founded in 1997 to help those taxpayers who wanted someone to help guide them in getting back on track with the IRS. For over 13 years, we have assisted our clients in audit representation, tax return filing, installment agreements (payment plans), offers in compromise, currently not collectible status placement and penalty abatement. We work everyday to continue to help our clients get out from under their tax debt and get their lives back on track.

JK Harris reminds taxpayers – IRS holds special open house to help veterans and people with disabilities on September 25

JK Harris wants to reminds taxpayers that the IRS will be holding an open house on September 25th to help veterans and people with disabilities solve their tax problems and respond to IRS notices. For more details, read the full IRS release below.
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WASHINGTON — The Internal Revenue Service will host a special nationwide open house on Saturday, Sept. 25 to help taxpayers –– especially veterans and people with disabilities –– solve tax problems and respond to IRS notices.

One hundred offices, at least one in every state, will be open from 9 a.m. to 2 p.m. local time. IRS staff will be available on site or by telephone to help taxpayers work through issues and leave with solutions.

In many locations, the IRS will partner with organizations that serve veterans and the disabled to offer additional help and information to people in these communities. Partner organizations include the National Disability Institute (NDI), Vets First, Department of Veterans Affairs, National Council on Independent Living and the American Legion.

“Taxpayers have tremendous success solving their tax issues at our open houses,” IRS Commissioner Doug Shulman said. “I want to encourage veterans and people with disabilities to come in on Sept. 25. Just like we reached out earlier this year to small businesses and victims of the Gulf Oil Spill, we want to help other taxpayers put their toughest problems behind them.”

IRS locations will be equipped to handle issues involving notices and payments, return preparation, audits and a variety of other issues. At a previous IRS open house on June 5, over 6,700 taxpayers sought and received assistance and 96 percent had their issues resolved the same day.

At the Sept. 25 open house, anyone who has a tax question or has received a notice can speak with an IRS employee to get an answer to their question or a clear explanation of what is necessary to satisfy the request. A taxpayer who cannot pay a balance due can find out whether an installment agreement is appropriate and, if so, fill out the paperwork then and there. Assistance with offers-in-compromise — an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed — will also be available. Likewise, a taxpayer struggling to complete a certain IRS form or schedule can work directly with IRS staff to get the job done.

Taxpayers requiring special services, such as interpretation for the deaf or hard of hearing, should check local listings and call the local IRS Office/Taxpayer Assistance Center ahead of time to schedule an appointment.

The open house on Sept. 25 is the third of three events scheduled after this year’s tax season. Plans are underway for similar events next year. Details will be available at a later date.

Reminder for Small Tax-Exempt Organizations

The IRS also encourages representatives of small tax-exempt charitable community organizations, many of which serve people with disabilities and veterans, to file Form 990-N before the Oct. 15 deadline. Community organizations that fail to file a Form 990-N by this date risk losing their tax exempt status. As of June 30, more than 320,000 organizations were at risk of losing their exempt status.

Posted by JK Harris

Why you should choose JK Harris to represent you with your back tax problem

As JK Harris nears its 13th anniversary in business, I look back at our history and it has been an interesting one. As one of the pioneers in the industry, we have navigated a long path to get to where we are today, but it has been well worth the journey. After 13 years, we are still the largest tax representation firm in the country. I realize largest doesn’t necessarily equate to being the best – but if you want to know why you should choose JK Harris to represent you with your back tax problem, I can give you several reasons why we are the best choice in tax representation.

* You can meet with one of our consultants face-to-face – We have offices in 325 cities where you can meet one of our consultants face to face. Many of our competitors can only assist you over the phone, which isn’t always comforting, particularly when you are dealing with something as stressful as a tax problem. However, if you cannot make it to one of our office locations, we do have staff available to assist you over the phone.

* JK Harris revolutionized the tax representation industry by changing the way we do business. JK Harris does not sell you a resolution service before we analyze your tax situation. Many firms will continue to sell you a particular type of tax resolution up front – such as an Offer in Compromise – without knowing what your financial details are. JK Harris will obtain all of your documents and financial information. We will then analyze what your tax debt is and if you qualify for one of the IRS’ programs that allow you to settle your debt for less than the amount that you owe. After we analyze your personal situation, we give you a report detailing what options you qualify for. With this report, you can hire JK Harris to assist you in resolving your tax issue – or you can use it to resolve your tax problems on your own. You can even take it to one of our competitors, if you like. The choice is yours.

* Let our experienced tax team assist you in ridding yourself of the burden of tax problems. Whether you need audit representation, help with back payroll taxes or your own personal back tax issues, JK Harris’ tax team has the power of attorneys, CPAs and Enrolled Agents who know the IRS’ rules and will work with the IRS on your behalf. Put the power of our professionals and paraprofessional staff to work for you.

Join the ranks of our satisfied customers. Call JK Harris today and let us help you put your tax issues behind you.

JK Harris reminds taxpayers with back tax debt of their rights and options

By Samuel Trotter, Enrolled Agent

While the majority of Americans receive a tax refund each spring, a percentage of individual taxpayers and small business owners owe the IRS back taxes. For these delinquent taxpayers, they have options for getting back into the good graces of the IRS, but understanding each option is critical.

Anyone who can afford to repay their entire tax debt in one lump sum payment, should pay the debt as soon as possible to avoid excessive interest and penalties. Of course, not everyone is able to do this, so the IRS has other available options.

Taxpayers who are unable to repay their liability in one lump sum have the option of setting up an Installment Agreement to make consistent monthly payments to repay their tax debt. If you owe less than $25,000, the process is straightforward. You will need to complete a Form 9465 and mail it in with the tax bill to the IRS. The IRS will inform you in about 30 days if your payment plan proposal has been accepted.

For those taxpayers owing more than $25,000, a Form 433F, Collection Information Statement is required in addition to the Form 9465. This will require gathering financial documentation on your part, to show your current financial situation. This process is much more time-consuming and requires some detailed financial information.

It is possible that taxpayers who are undergoing financial hardship situation may qualify for the Offer in Compromise (OIC) program. The OIC program allows taxpayers to pay a portion of their tax debt to settle their account with the IRS. The taxpayer must meet the program’s qualifications and they must continue to file their tax returns for five years after the acceptance of their offer. The program is usually seen as a win-win for both the IRS and the taxpayer. The IRS collects part of a tax debt they may not have otherwise collected, as well as getting the taxpayer back into filing and paying their taxes each year. The taxpayer wins when they settle for less as it alleviates the tax burden and gives them a fresh start.

It is important to remember when weighing your tax resolution options that everyone’s tax situation is different. If you are not versed in tax law, settling your own tax debt with the IRS can be tricky. All taxpayers must remember the function of the IRS is to collect revenue for the Department of the Treasury. You have the right to representation before the IRS. Lawyers, CPAs and Enrolled Agents are the three designated professionals who are allowed to represent you before the IRS. If you go to the IRS without a professional representing you, you are at the mercy of the IRS. It is always in the taxpayer’s best interest to seek a professional’s assistance.

If you have tried to negotiate with the IRS and who believe you have been treated unfairly you have the right to seek help from the Taxpayer Adovcate Service. Taxpayer Advocate Service (TAS) is available to assist taxpayers who are experiencing economic harm such as not being able to provide necessities like housing, transportation, or food, taxpayers who are seeking help in resolving problems with the IRS, and those who believe an IRS system or procedure is not working as it should.

Offer in Compromise not an overnight solution to back tax debt

By Gina Anton, Director of Corporate Communications

The IRS’ Offer in Compromise (OIC) program is an excellent option for dealing with back tax debt, but it is also one that is often misunderstood by taxpayers. It is common for clients to come to us for assistance with back tax debt, assuming they will qualify for the Offer program. The OIC program allows a taxpayer to settle a tax debt for less than what is actually owed, and it brings the taxpayer back into IRS compliance – meaning they must continue to file their taxes to hold up the terms of the Offer in Compromise.

It’s important for taxpayers to understand two very critical issues about the OIC program: One, not every taxpayer qualifies for it. Two, it can take months and sometimes even more than a year for the IRS to make a decision about a taxpayer’s eligibility for the program.

That’s frustrating for both the taxpayer and for firms like JK Harris & Company that are trying to help people who owe back tax debt. In fact, most of the complaints that have been lodged against us are based on the frustration and anger the clients feel about this process.

Whether you are planning to hire JK Harris & Company or one of our competitors, or you want to attempt to negotiate an OIC on your own, you need to understand the process itself and how long it takes. Here’s the timeline you can expect for this long, arduous process.

It takes:

7 to 28 days from the date of a signed contract for an Offer in Compromise (OIC) to process the contract, submit the Power of Attorney (POA) and request the Master File from the IRS.

30 to 120 days to allow client to gather three months of current financial documents.

1 to 2 weeks to prepare appropriate forms and send to client for final review and signature.

2 to 8 weeks to get signed forms from client and prepare OIC package to be sent to IRS.

1 to 2 weeks to send OIC package to client for them to send to IRS.

2 to 4 weeks to receive response back from IRS, usually requesting updated documentation.

1, 3, 6, 12-plus months for IRS decision. IRS may request additional documentation. The more times the IRS requests documentation or clarification of documentation already sent, the longer it will take for their decision.

Note: Some timeframes are dependent on the client responding in a timely manner, while other timeframes are dependent on the IRS itself.

We often have to ask our clients to send in three month’s worth of financial documents in repeatedly due to the IRS’ requirements for the most recent financial information. The IRS may make this request over and over again to determine the taxpayer’s inability to pay their full tax liability. We must comply with their requests in order to negotiate on behalf of our client. This is why we must ask our clients repeatedly for financial documentation – there’s simply no way around it. Our clients find this frustrating and sometimes think it’s because we’ve lost their paperwork—we haven’t, it’s just that the IRS has taken so much time that the original paperwork gets out of date and they require us to get current information.

When you are looking to file an Offer in Compromise, know that you are getting into a time-consuming process. The Offer program was developed to assist those who cannot pay their full tax liability due to financial hardship. The process is long and difficult, but if you qualify in the end, it will give you a brand new start.