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Posted in Tax Deductions on May 17, 2012

Taxpayers who refinanced their homes may be eligible to deduct some costs associated with their loans.

Generally, for taxpayers who itemize, the ?points? paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be, depending on circumstances, fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, the interest deduction for points is determined by dividing the points paid by the number of payments to be made over the life of the loan. This information is usually available from lenders. Taxpayers may deduct points only for those payments made in the tax year. For example, a homeowner who paid $2,000 in points and who would make 360 payments on a 30-year mortgage could deduct $5.56 per monthly payment, or a total of $66.72 if he or she made 12 payments in one year.

However, if part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs ? such as appraisal fees and other non-interest fees ? generally are not deductible. Additionally, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken.  Please contact us if you?ve recently refinanced, and we can be a big help!

Last Updated by Paul Herman on 2012-05-17 08:15:32

Posted in Tax Deductions on May 14, 2012

Have you tried everything to resolve a tax problem with the IRS but are still experiencing delays? Are you facing what you consider to be an economic burden or hardship due to IRS collection or other actions? If so, you can seek the assistance of the Taxpayer Advocate Service.

You may request the assistance of the Taxpayer Advocate if you find that you can no longer provide for basic necessities such as housing, transportation or food because of IRS actions. You can also seek help from the Taxpayer Advocate Service if you own a business and are unable to meet basic expenses such as payroll because of IRS actions. A delay of more than 30 days to resolve a tax related problem or no response by the date promised may also qualify you for assistance.

Qualified taxpayers will receive personalized service from a knowledgeable Taxpayer Advocate. The Advocate will listen to your situation, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved to the fullest extent permitted by law.

The Taxpayer Advocate Service is an independent organization within the IRS and can help clear up problems that resulted from previous contacts with the IRS. Taxpayer Advocates will ensure that your case is given a complete and impartial review. What?s more, if your problem affects other taxpayers, the Taxpayer Advocate Service can work to change the system.

Last Updated by Paul Herman on 2012-05-14 09:41:01

Posted in Tax Deductions on May 09, 2012

When preparing to file your federal tax return, don?t forget your contributions to charitable organizations. Your donations can add up to a nice tax deduction for your corporation or your personal taxes if you are a member of a flow-through business entity and itemize deductions on IRS Form 1040, Schedule A.

Here are a few tips to help make sure your contributions pay off on your tax return:

You cannot deduct contributions made to specific individuals, political organizations and candidates, the value of your time or services and the cost of raffles, bingo, or other games of chance.

To be deductible, contributions must be made to qualified organizations.

Organizations can tell you if they are qualified and if donations to them are deductible. IRS.gov has an exempt organization search feature to help you see if an organization is qualified. IRS Publication 78, Cumulative List of Organizations, lists all charitable organizations except those most recently granted tax exempt status. Pub. 78 is available online and in many public libraries.  Alternatively, contact us for more!

Last Updated by Paul Herman on 2012-05-09 08:21:44

Posted in Tax Deductions on May 07, 2012

Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could cause your tax return to be rejected by the IRS.

For newlyweds, the tax scenario can begin when the bride says "I do" and takes her husband's surname, but doesn't tell the SSA about the name change. If the couple files a joint tax return with her new name, the IRS computers will not be able to match the new name with the SSN.

Similarly, after a divorce, a woman who had taken her husband?s name and had made that change known to the SSA should contact the SSA if she reassumes a previous name.

It's easy to inform the SSA of a name change by filing Form SS-5 at a local SSA office. It usually takes two weeks to have the change verified. The form is available on the agency's Web site, www.ssa.gov, by calling toll free 1-800-772-1213 and at local offices. The SSA Web site provides the addresses of local offices.  Alternatively, please contact us as we can be of even greater assistance with your spousal situation.

Last Updated by Paul Herman on 2012-05-07 09:15:08

Posted in Tax Deductions on May 03, 2012

Following are some generally recognized financial planning tools that may help you reduce your tax bill. 

Charitable Giving - Instead of selling your appreciated long-term securities, donate the stock instead and avoid paying tax on the unrealized gain while still getting a charitable tax deduction for the full fair market value. 

Health Savings Accounts (HSAs) - If you have a high deductible medical plan you can open an HSA and make tax deductible contributions to your account to pay for medical expenses. Unlike flexible spending arrangements (FSAs), the contributions can carry over for medical expenses in future years. 

ROTH IRAs - Contributions to a ROTH IRA are not tax deductible but the qualified distributions, including earnings are tax-free. 

Municipal Bonds - Interest earned on these types of investments is tax-exempt. 

Own a home - most of the cost of this type of investment is financed and the interest (on mortgages up to $1,000,000) is tax deductible. When the property is sold, individuals may exclude up to $250,000 ($500,000 if married jointly) of the gain. 

Retirement Plans - Participate in your employer sponsored retirement plan, especially if there is a matching component. You will receive a current tax deduction and the tax-deferred compounding can add up to a large retirement savings.

Last Updated by Paul Herman on 2012-05-03 07:49:11

Posted in Tax Deductions on Apr 30, 2012

Coverdell Savings Accounts

Last Updated by Paul Herman on 2012-04-30 08:21:21

Posted in Tax Deductions on Apr 26, 2012

Oops! You discovered an error after filing your tax return. Should you file an amended return? The answer depends on the type of error. The IRS usually corrects mathematical errors or requests missing forms (such as W-2s) or schedules. In these cases, do not amend your return.

File an amended return if any of the following were reported incorrectly:

• Your filing status
• Your total income
• Your deductions or credits

Use Form 1040X (Amended U.S. Individual Income Tax Return), clearly identifying the year of the return that your are amending at the top of the form, to correct a paper or electronically filed Form 1040, 1040A, or 1040EZ. A separate 1040X is required for each year that you are amending and each form must be mailed in a separate envelope to the IRS processing center for your state. Addresses for the centers can be found in the 1040X instructions. 

Form 1040X has three columns: Column A for original or adjusted figures from the filed return; Column C for corrected figures; Column B to show the difference between the figures in Columns A and C. Explain the items that you are changing on the back of the form. If the changes involve another schedule or form, attach it to the 1040X. For example, if you are filing a 1040X because you have a qualifying child and want to claim the Earned Income Tax Credit, you must complete and attach a Schedule EIC to the amended return. 

If you are filing to claim an additional refund, wait until receive the refund from your original form before filing Form 1040X. If you owe additional tax for the prior year, Form 1040X must have been filed and the tax paid by April 15^th of this year to avoid any penalty and interest charges. 

Generally, you must file Form 1040X to claim a refund within three years from the date that you filed your original return, or within two years from the date that you paid the tax, whichever is later. Please contact us for more information on amending a tax return.

Last Updated by Paul Herman on 2012-04-26 07:56:26

Posted in Tax Deductions on Apr 24, 2012

Are you expecting a tax refund from the IRS this year? If you file a paper tax return, your refund should be issued in about six to eight weeks from the date on which the IRS receives it. If you file electronically, expect your refund in about half that time and, even faster if you choose direct deposit instead of a check by mail.

Direct deposit is available for both paper and electronic returns. If you prepare a paper return, fill in the direct deposit information in the "Refund" section of the tax form. Make sure that your bank or financial routing and account numbers are accurate as incorrect numbers can cause your refund to be misdirected or delayed.

A few words of caution: some banks and financial institutions do not allow deposit of a joint refund into an individual account so check to make sure that your direct deposit will be accepted. Also, you may not receive your refund as quickly as expected. A refund can be delayed for various reasons such as a name and Social Security number on the tax return not matching IRS records, a missing signature or attachment, or mathematical errors which require extra time for the IRS to correct.

Last Updated by Paul Herman on 2012-04-24 08:40:44

Posted in Tax Deductions on Apr 19, 2012

The Earned Income Tax Credit (EITC) is for working individuals who do not earn high incomes. Taxpayers who qualify and claim the credit could pay less or no federal tax, or even get a tax refund. However, the IRS estimates that 25% of those who qualify don?t claim the credit and advises taxpayers to consider claiming tax credits ? i.e., a dollar-for-dollar reduction of taxes owed ? for which they might be eligible.

Some of the credits taxpayers could be eligible to claim include:

Earned Income Tax Credit (EITC): a refundable credit for low-income working individuals and families. Income and family size determine the EITC amount. If the EITC exceeds the amount of taxes owed, those who claim and qualify for the credit receive a tax refund. See IRS Publication 596, Earned Income Credit (EIC) or use the EITC Assistant to see if you qualify.

Child Tax Credit: for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child and it can be claimed in addition to the credit for child and dependent care expenses. See Pub. 972, Child Tax Credit.

Child and Dependent Care Credit: for expenses paid for the care of children under age 13, or for a disabled spouse or dependent, to enable the taxpayer to work. The amount of qualifying expenses is limited and the credit is a percentage of those expenses. See Pub. 503, Child and Dependent Care Expenses.

Adoption Credit: a tax credit of up to $13,170 can be taken for qualifying expenses paid to adopt an eligible child. See Pub. 968, Tax Benefits for Adoption.

Credit for the Elderly and Disabled: available to individuals who are either age 65+ or under age 65 and retired on permanent and total disability, and who are citizens or residents. Income limitations apply. See Pub. 524, Credit for the Elderly or the Disabled.

Education Credits (Two Available): for those who pay higher education costs.  The American Opportunity Credit (formerly the Hope Credit) is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on a tax return.  The Lifetime Learning Credit is available for all post-secondary education for an unlimited number of years. A taxpayer cannot claim both credits for the same student in one year. See Publication 970, Tax Benefits for Education.

Retirement Savings Contribution Credit: a credit for a percentage of qualified retirement savings contributions, such as contributions to a traditional or Roth IRA or salary reduction contributions to a SEP or SIMPLE plan. To be eligible, you must be at least age 18 at the end of the year and not a student or an individual for whom someone else claims a personal exemption. Also, your adjusted gross income (AGI) must be below a certain amount. See chapter four in Publication 590, Individual Retirement Arrangements (IRAs).

In addition to those listed here, other credits are available to eligible taxpayers.  Please contact us so we may asses your specific situation, and offer advice on the best way to claim your credits. 

Last Updated by Paul Herman on 2012-04-19 07:41:44

Posted in Tax Deductions on Apr 12, 2012

Whether you are self-employed or an employee, if you use a portion of your home exclusively and regularly for business purposes, you may be able to take a home office deduction.

You can deduct certain expenses if your home office is the principal place where your trade or business is conducted or where you meet and deal with clients or patients in the course of your business. If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.

If you are an employee, you have additional requirements to meet. You cannot take the home office deduction unless the business use of your home is for the convenience of your employer. Also, you cannot take deductions for space you are renting to your employer.

Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.

For more information, please contact me for a free, no obligation consultation.  I have lots of helpful tax preparation tips, which I regularly provide to my customers in Westchester County, NY- Scarsdale, Larchmont, Rye, and beyond.

Please don¹t hesitate to contact me!

Last Updated by Paul Herman on 2012-04-12 13:07:44

Posted in Tax Deductions on Apr 04, 2012

People in general prefer to make a living doing what they love, which is often a hobby. At tax time, however, there is a difference between a business and a hobby. A hobby is an activity for which you do not expect to make a profit. If you carry on a business or investment activity from which you do not expect to make a profit, there is a limit on the deductions that you can take.

Income from a hobby, i.e., an activity from which you do not expect to make a profit such as a farm operated mainly for recreation, must be included on your tax return. You cannot use a loss from the activity to offset other income. All activities you do as a hobby, or mainly for sport or recreation, come under this limit. An investment activity intended only to produce tax losses for investors comes under this limit also. The limit on not-for-profit losses applies to individuals, partnerships, estates trusts, and S corporations; it does not apply to corporations other than S corporations. For more information on these entities, please refer to business structures.

I often get asked by my clients in Westchester County - from Scarsdale, Larchmont, Rye, and beyond ? for advice on this.  Determining if you are carrying on an activity for profit is based on many factors including whether:

·  You carry on the activity in a business-like manner.

·  The time and effort you put into the activity indicate you intend to make it profitable.

·  You depend on income from the activity for your livelihood.

·  Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business).

·  You change your methods of operation in an attempt to improve profitability.

·  You, or your advisors, have the knowledge needed to carry on the activity as a successful business.

·  You were successful in making a profit in similar activities in the past.

·  The activity makes a profit in some years and the amount of profit it makes.

·  You can expect to make a future profit from the appreciation of the assets used in the activity.

Last Updated by Paul Herman on 2012-04-04 15:34:49

Posted in Business on Mar 29, 2012

10 Ways to Avoid Problems at Tax Time

If you're looking for ways to avoid last-minute problems with filing your taxes, take a look at these tips from the IRS:

1.     Don't Procrastinate. If you wait until the last minute, your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and may increase your risk of making an error.

2.     Organize your tax records. Tax preparation time can be significantly reduced if you develop a system for organizing your records and receipts. Start with the income, deduction or tax credit items that were on last year?s return.

3.     Visit the IRS online at: www.irs.gov You can find tax law information and answers to frequently asked tax questions.

4.     Take advantage of free assistance. The IRS offers recorded messages on about 150 tax topics through its toll-free TeleTax service at 1-800-829-4477. It also offers federal tax forms and publications at 1-800-829-3676. Some libraries, post offices, banks, copy centers and grocery and office supply stores carry the most widely requested forms and instructions. Libraries may also have reference sets of IRS publications.

         The IRS also staffs a tax Help Line for Individuals at 1-800-829-1040 and a Business and Specialty Tax Line at 1-800-829-4933. Hearing-impaired individuals with access to TTY/TDD equipment may call 1-800-829-4059 for assistance.

5.     Use IRS Taxpayer Assistance Centers and Volunteer Programs. Free tax help is available at IRS offices nationwide. Also, check your newspaper or local IRS office to find locations for Volunteer Income Tax Assistance or Tax Counseling for the Elderly sites. To obtain the location, dates, and hours of the VITA or TCE volunteer site closest to you, call the IRS toll-free Tax Help Line for Individuals at 1-800-829-1040.

6.     Double-check your Math and data entries for possible errors and make sure you have provided the names and correct (and legibly written) Social Security or other identification numbers for yourself, your spouse and your dependents.

7.     Have your refund deposited directly to your bank account to speed it up and to reduce the chance of theft. Check the tax instructions for details on entering the routing and account numbers on your tax return and make sure the numbers you enter are correct.

8.     Don't panic if you can?t immediately pay any taxes owed. You can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late payment penalty rate. You also have options for charging your balance on a credit card either online as part of an electronic return or by phone through a processing agent.

9.     Electronic filers with a balance due can file early and authorize the government?s financial agent to take the money directly from their checking or savings account on April 15^th, with no fee.  Note that if you file your tax return or a request for a filing extension on time, even if you can?t pay, you avoid potential late filing penalties.

10.  Ask your Accountant to request an extension of time to file. If the clock runs out, you can get an automatic six-month extension of time to file, i.e. until October 15^th. An extension of time to file does not give you an extension of time to pay, however. You can call 1-888-796-1074, e-file a Form 4868, Application for Automatic Extension of Time to File, that is included in most tax preparation software, or send a paper Form 4868 to the IRS to request the extension. You will need the adjusted gross income and total tax amounts from last year's return if you request the extension by computer or phone. You may also get an extension by charging your expected balance on a credit card, and then you won?t have to file the form. Contact Official Payments Corporation at 1-800-272-9829 or Link2Gov Corporation. There is no IRS fee for credit card payments, but the processors charge a convenience fee.

Our tip? Contact us. We're experts in tax preparation and filing. Visit our website: http://www.hermancpa.com/

Last Updated by Paul Herman on 2012-03-29 08:12:37

Posted in Business on Mar 14, 2012

Unable to file your income tax return by April 15^th? You can request an automatic six-month extension to file from the IRS using Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return. An extension allows extra time to send paperwork to the IRS, but any tax due is still payable by April 15^th. An accurate estimate of any tax due is required when you request an extension. You may also send a payment for the expected balance due, but this is not required to obtain the extension. Interest will be owed on any amounts not paid by April 15th, plus a late payment penalty is incurred if you have paid less than 90% of your total tax by that date.

There are three ways to request an automatic extension: online, mail or phone. You can file Form 4868 and make an extension-related payment online or you can mail the form to the IRS. Form 4868 can be filed by phone anytime through April 15^th using the special toll-free phone number: 1-888-796-1074. Use Form 4868 as a worksheet to prepare for the call and have a copy of your federal income tax return available as you will need to provide certain information from it. The system will give you a confirmation number to verify that the extension request has been accepted. Note this number on your copy of Form 4868 and keep it for your records. Do not send the form to the IRS if you have filed it by phone.

As filing tax extension requests is an area of our expertise, please contact us for more detailed information on how to file an extension correctly.

For more tax tips please visit my website: http://hermancpa.com/

Last Updated by Paul Herman on 2012-03-14 09:30:37

Posted in Business on Mar 07, 2012

A tax shelter is an investment that usually requires substantial contributions with a degree of risk. It often involves current losses to produce future gains. An investment in low income property that provides depreciation benefits is one example of a legitimate tax shelter. Generally, the amount of your deductions or losses from most activities is limited to the amount that you have at risk. You are considered at risk in an activity for the following amounts: 
# The amount of cash you invested in the activity, 
# The adjusted basis of other property you contributed to the activity; and 
# The amount you borrowed to invest in the activity, to the extent that you are personally liable on the loan or have pledged property not used in the activity as security.
For more information on the at?risk rules, refer to Publication 925, Passive Activity and At?Risk Rules.

Note ? ?Tax shelter trade or business activity losses or credits are often considered passive activity losses or credits. Such losses or credits may only be used to offset income from other passive activities. They cannot be deducted against other income such as wages, salaries, professional fees, or portfolio income such as interest and dividends. Allowable losses or credits are computed on Form 8582 (PDF), Passive Activity Loss Limitations.

The excess passive losses and credits generated from passive activity tax shelters can be carried forward until you can use them or until you dispose of your investment in the tax shelter.

For more information on passive income and losses, refer to Topic 425, Passive Activities ? Losses and Credits or to Publication 925.

Last Updated by Paul Herman on 2012-03-07 09:40:17

Posted in Business on Mar 02, 2012

 Haven't Filed a Tax Return in Years?...Well, click here-->  http://www.youtube.com/watch?v=Sz4AJBWE_Ac   

Last Updated by Paul Herman on 2012-03-05 08:12:27

Posted in Business on Mar 01, 2012

In a press release from January 31, 2012, IRS commissioner Doug Shulman announced the results of a nationwide effort to cut down on identity theft and refund fraud. The IRS worked in conjunction with the Justice Department's Tax Division and local U.S. Attorneys' offices to target more than one hundred people across twenty-three states. The sweep resulted in 939 criminal charges against would-be tax frauds.

In addition to the sweep, IRS auditors and investigators visited approximately 150 money-service businesses to conduct extensive compliance visits and insure these businesses aren't engaged in practices which may facilitate refund fraud and identity theft.

Taxpayer identity theft normally occurs when a thief uses a legitimate taxpayer's identity to falsely file a tax return and claim a refund. A victim of identity theft is rarely aware their identity has been stolen until he or she attempts to file a legitimate return later in the tax season and discovers that another return has already been filed using their Social Security Number.

If you receive an IRS notification for any of the following reasons, you should take immediate action:

• More than one return was filed for you in a single tax year
• You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return, or
• IRS records indicate you received wages from an employer unknown to you.

Immediately respond to the name and number printed on the letter if you receive such notification.

The IRS advises you to minimize your risk of identity theft by:

• Rarely carrying your Social Security card or documents with your SSN on them.
• Disclosing your SSN only when required. Many businesses may ask for your SSN but do not actually need it. Do not give out your SSN unless absolutely necessary.
• Protecting your financial information, both online and in print.
• Checking your credit report periodically. You may check your credit without charge once a year at www.equifax.com, www.experian.com, or www.transunion.com . By using each of these services only once each year, you can actually check your credit report every four months.
• Protecting your personal computers using firewalls, anti-spam and anti-virus software. Keep your software current via frequent updates. Use secure passwords and change them often.

By taking action against tax fraud criminals, Commissioner Shulman sends a clear message to anyone considering participation in a tax fraud scheme. He said "We are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail". The IRS is taking additional steps to prevent identity theft and detect fraud by using new identity-theft screening filters and placing identity-theft indicators on taxpayer accounts to track and manage incidents of identity theft. Despite these advances, you should always be vigilant in protecting your Social Security number and financial information.

For more information please visit my website: http://hermancpa.com/Blog

Last Updated by Paul Herman on 2012-03-01 14:58:22

Posted in Business on Feb 22, 2012

The American Institute of Certified Public Accountants has developed and distributed detailed a guide for record retention. We reproduce below selections that may be of particular interest to housing cooperatives and condominiums and their residents. 

Last Updated by Paul Herman on 2012-02-22 17:28:53

Posted in Business on Feb 15, 2012

Just how long you should keep records is a matter of judgement, space, and a combination of state and federal statutes of limitations. 

Returns can be audited for up to 3 years after filing for your Federal return (6 years if underreported income is involved). So all records substantiating tax deductions should be kept for at least that long. 

Following are recommended retention periods for the listed records: 

Records Retention Period 
Cancelled Checks 7 years 
Bank Deposit Slips 7 years 
Bank Statements 7 years 
Tax Returns permanent 
Employment tax returns 7 years 
Expense reports 7 years 
Entertainment records 7 years 
Financial Statements permanent 
Contracts permanent 
Minutes of meetings Life of Company plus 7 years 
Corporate stock records permanent 
Employee records Period of employment Plus 7 years 
Depreciation schedules Life of Business Plus 7 years 
Real Estate records Permanent 
General ledger Life of Business Plus 7 years 
Inventory records 7 years 
Home improvement records Ownership period Plus 7 years 
Investment records Ownership period Plus 7 years 

Last Updated by Paul Herman on 2012-02-16 15:07:44

Posted in Business on Feb 08, 2012

Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit.

What Can I Deduct?

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

It is important to separate business expenses from the following expenses:

• The expenses used to figure the cost of goods sold,
• Capital Expenses, and
• Personal Expenses.

• The cost of product or raw materials, including freight
• Storage
• Direct labor costs (including contributions to pensions or annuity plans) for workers who produce the products
• Factory overhead

• Business start-up cost (See the note below)
• Business assets
• Improvements

• Employees' Pay - You can generally deduct the pay you give your employees for the services they perform for your business.
• Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees', retirement.
• Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
• Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
• Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
• Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.

Last Updated by Paul Herman on 2012-02-08 06:35:52

Posted in IRS on Feb 24, 2011

In its latest effort to help struggling taxpayers, the Internal Revenue Service today announced a series of new steps to help people get a fresh start with their tax liabilities.

The goal is to help individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers.  Specifically, the IRS is announcing new policies and programs to help taxpayers pay back taxes and avoid tax liens.

?We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,? IRS Commissioner Doug Shulman said. ?These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.?

Today's announcement centers on the IRS making important changes to its lien filing practices that will lessen the negative impact on taxpayers. The changes include:

• Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
• Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
• Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
• Creating easier access to Installment Agreements for more struggling small businesses.
• Expanding a streamlined Offer in Compromise program to cover more taxpayers.

?These steps are in the best interest of both taxpayers and the tax system,? Shulman said. ?People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens.?

This is another in a series of steps to help struggling taxpayers. In 2008, the IRS announced lien relief for people trying to refinance or sell a home. In 2009, the IRS added new flexibility for taxpayers facing payment or collection problems. And last year, the IRS held about 1,000 special open houses to help small businesses and individuals resolve tax issues with the Agency.

Today's announcement comes after a review of collection operations which Shulman launched last year, as well as input from the Internal Revenue Service Advisory Council and the National Taxpayer Advocate.

Last Updated by Paul Herman on 2012-02-05 09:51:25

Posted in White House Budget on Feb 20, 2011

President Obama's fiscal 2012 budget requests funding to allow the IRS to hire an additional 5,100 agents.  The increase to the IRS budget would be over 9%.  With the White House forced to accept a continuation of the so-called "Bush Era tax cuts", Mr. Obama is apparently seeking to increase tax revenues through greater enforcement efforts. This is probably not the kind fo fiscal discipline that voters had in mind last November!

Last Updated by Paul Herman on 2012-02-05 09:52:11