IRS Tax Lawyer Blog

In an earlier blog entry, we wrote about the IRS Offer in Compromise ("OIC"). One of the most misrepresented items in an OIC is the minimum offer. This amount is determined by the reasonable collection potential.

Your reasonable collection potential (RCP) is your magic number. This "RCP" is the amount that, based upon IRS's standards, is the amount of money that the government believes it can collect from you. Your offer amount must equal or exceed this reasonable collection potential amount. This amount is a combination of two separate calculations:

Continue reading "How Do You Calculate OIC Reasonable Collection Potential?" »

Yesterday a caller asked me about an Offer in Compromise with IRS. He wanted to know if the radio and mail ads were true, that he could pay "pennies on the dollar" to settle with IRS. So let's discuss what you really have to pay.

Many of my tax collection clients have received mailings from "tax resolution experts". These mailings suggest to the potential client that they could pay 10% or 20% of the tax liability shown on an IRS tax lien. Those liens get filed, and the "experts" come calling. Okay, let me explain how this OIC thing really works.

Continue reading "How Do You Calculate the Offer in Compromise?" »

CPA's and Tax Professionals: Has anyone noticed that there are more and more tax return preparers that will cheat the tax return system? They will file returns with fraudulent deductions and credits, and allow magically large refunds for their numerous lower-income clients. So why is this a problem for you?

Your would-be clients use these dishonest preparers by the thousands, because the dishonest tax return yields a much bigger refund than your honest return. You, on the other hand, prepare returns with integrity, accountability, and accuracy. And often, that accuracy does not yield the large refunds achieved by those "other" preparers. So your potential clients seek out those preparers willing to cheat to get large tax refunds. This unlawful practice creates, for you, unfair competition during tax prep season. But IRS could actually correct this unfair competition. Please read further.

Continue reading "Correcting the Unfair Advantage of Dishonest Return Preparers" »

There are lots of companies that try to trick you to get your business. One sure scam tactic is the misleading mail piece. Yes, I have details, to help you spot these scams.

Every week, potential clients call about something received in the mail. The mail looks official, even reads like something from the IRS, but it is definitely not official. Stay away from firms that use trickery to get your attention! Instead, rely on professionals that are knowledgeable, honest and well-known. Read below, as I explain how to spot this scam mail.

Continue reading "How to Avoid Tax Settlement Scammers !" »

Tax professionals representing clients in audits are asking this big question: Is the IRS Form PLE, or "Estimated Personal Living Expenses" necessary for the client (taxpayer) to complete in an audit?

Typically, during an IRS examination, the auditor wants to do a full, thorough review of the taxpayer's items on the tax return. That review could probe whether there is undisclosed (unreported) income. Then, when the exam is nearly complete, the IRS agent seeks a closing agreement with the taxpayer on the amount of tax increase, if any. So why does IRS need to receive a Personal Living Expenses statement? Well ...

Continue reading "Give My Personal Living Expenses to an IRS Auditor?" »

A CPA colleague recently asked me a technical question regarding filing Illinois Form C-289, Domestic Corporation Annual Report. Her client reported too much paid-in-capital, and was therefore paying too much Illinois Franchise Tax. The client did not know how to reduce either amount.

Below I summarize the background of the situation. Afterwards, I outline the options and steps for the tax professional to handle this tax reduction, if necessary. This could apply to nearly any small, for-profit business corporation in Illinois.

Continue reading "Reducing Illinois Franchise Tax: Amending Paid-in-Capital" »

President Obama and Congress forged a plan to control middle-class taxes and help financial growth in the U.S. The January 1, 2013 agreement was designed to avoid the 2012 year-end "fiscal cliff" heard so much in the media.

This agreement, however, is only a temporary fix, as more negotiations must occur by late February to raise the debt ceiling. The final agreement, called an "across the board sequester", still does the job of avoiding middle-income tax increases. Below lists the terms important to most families.

Continue reading ""Fiscal Cliff Agreement" - Tax Relief for Middle-Class Families" »