Choosing a Tax Preparer

If you pay someone to prepare your tax return, know that you are legally responsible for what’s on your tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return. Most return preparers are professional, honest and provide excellent…

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IRS USE OF HARD-CORE ENFORCEMENT TOOLS, ESPECIALLY TAX LIENS

The Taxpayer Advocate’s 2010 annual report to congress describes continuing concern that IRS collection practices inflict unnecessary harm on financially struggling taxpayers and fail to achieve the IRS’s overriding objective of increasing long-term voluntary compliance with the tax laws.  “Tax collection requires a delicate balancing of the government’s interest in collecting revenue and ensuring that…

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Common Terms used in IRS Appeals

90-day letter Term includes the 150-day letter. Admin File A file consisting of one or more examined tax returns of a taxpayer, the report of examination, and all papers, correspondence, and other documents relative to the taxpayer’s liability for the year or years involved. An administrative file may also consist of collection related documents such…

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IRS Fast Track Mediation: Small Businesses + Self Employed

The IRS released Announcement 2011-05 creating opportunity for small business and self-employed taxpayers to use the Fast Track Settlement process to resolve disputes within the IRS’s Small Business/Self Employed (SB/SE) units of the IRS in certain locations including Chicago, Ill.; Houston, Texas; St. Paul, Minn.; Philadelphia, Pa.; central New Jersey, and San Diego, Laguna Niguel, and…

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Dept of Justice Program to Shut Down Schemes and Scams – Check out your Tax Return Preparer

The Department of Justice, Tax Division, working together with the IRS, has intensified its efforts to shut down fraudulent tax return preparers and promoters of tax-fraud schemes, using both civil and criminal enforcement. Under the Tax Division’s civil injunction program, the Division files a lawsuit seeking a court order that prohibits a person from engaging in…

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Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 aka ‘Bush Tax Cut Extensions’

Individuals The following Bush tax cuts that expired for tax years beginning after December 31, 2009, under the Economic Growth and Tax Relief Reconciliation Act of 2001  (EGTRRA), are extended through 2011: • Election to claim itemized deduction for state/local sales taxes. • Interest deduction for mortgage insurance premiums. • Up-to-$250 above-the-line deduction for teachers’ out-of-pocket…

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2011 Payroll Tax Instruction – IRS Notice 1036

According to the IRS millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. Unbelievably this…

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IRS Examination Letters Offering an Appeal

Letter 525 – General 30 Day Letter This letter accompanies a report giving you a computation of the proposed adjustments to your tax return. It informs you of the courses of action to take if you do not agree with the proposed adjustments. The letter explains that if you agree with the adjustment, you sign…

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IRS Collection Letters and Notices Offering an Appeal

Letter 11 – Final Notice of Intent to Levy and Notice of Your Right to a Hearing This letter is to notify you of your unpaid taxes and that the Service intends to levy to collect the amount owed. The letter and referenced publications explain how to request an appeal if you do not agree.…

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IRS Appeals Exam Issues

See Revenue procedure 2009-44 as well as Internal Revenue Manual 35.5.5 for more information. There are two basic types of cases considered by IRS appeals officers. They are non-docketed cases and docketed cases. In non-docketed cases typically, exam conducts an audit of a return and proposes adjustments. The taxpayer has three options. He can agree with the…

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