Posted by : Daniel Stoica in (Blog) On: December 22nd, 2010
The Tweet Before Christmas! #TweetB4Christmas by @JessicaNorthey
The Tweet Before Christmas! #TweetB4Christmas by @JessicaNorthey
Declaration of Taxpayer Rights
I. Protection of Your Rights
IRS employees will explain and protect your rights as a taxpayer throughout your contact with us.
II. Privacy and Confidentiality
The IRS will not disclose to anyone the information you give us, except as authorized by law. You have the right to know why we are asking you for information, how we will use it, and what happens if you do not provide requested information.
III. Professional and Courteous Service
If you believe that an IRS employee has not treated you in a professional, fair, and courteous manner, you should tell that employee’s supervisor. If the supervisor’s response is not satisfactory, you should write to your IRS District Director or Service Center Director.
You may either represent yourself or, with proper written authorization, have someone else represent you in your place. Your representative must be a person allowed to practice before the IRS, such as an attorney, certified public accountant, or enrolled agent. If you are in an interview and ask to consult with such a person, then we must stop and reschedule the interview in most cases.
You can have someone accompany you at an interview. You may make sound recordings of any meetings with our examination, appeal, or collection personnel, provided you tell us in writing 10 days before the meeting.
V. Payment of Only the Correct Amount of Tax
You are responsible for paying only the correct amount of tax due under the law—no more, no less. If you cannot pay all of your tax when it is due, you may be able to make monthly installment payments.
VI. Help With Unresolved Tax Problems
The National Taxpayer Advocate’s Problem Resolution Program can help you if you have tried unsuccessfully to resolve a problem with the IRS. Your local Taxpayer Advocate can offer you special help if you have a significant hardship as a result of a tax problem. For more information, call toll-free 1–877–777–4778 (1–800–829– 4059 for TTY/TDD users) or write to the Taxpayer Advocate at the IRS office that last contacted you.
VII. Appeals and Judicial Review
If you disagree with us about the amount of your tax liability or certain collection actions, you have the right to ask the Appeals Office to review your case. You may also ask a court to review your case.
VIII. Relief From Certain Penalties and Interest
The IRS will waive penalties when allowed by law if you can show you acted reasonably and in good faith or relied on the incorrect advice of an IRS employee. We will waive interest that is the result of certain errors or delays caused by an IRS employee.
Examinations, Appeals, Collections, and Refunds
We accept most taxpayer’s returns as filed. If we inquire about your return or select it for examination, it does not suggest that you are dishonest. The inquiry or examination may or may not result in more tax. We may close your case without change; or, you may receive a refund.
The process of selecting a return for examination usually begins in one of two ways. First, we use computer programs to identify returns that may have incorrect amounts. These programs may be based on information returns, such as Forms 1099 and W–2, on studies of past examinations, or on certain issues identified by compliance projects. Second, we use information from outside sources that indicates that a return may have incorrect amounts. These sources may include newspapers, public records, and individuals. If we determine that the information is accurate and reliable, we may use it to select a return for examination.
Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, explains the rules and procedures that we follow in examinations. The following sections give an overview of how we conduct examinations.
We handle many examinations and inquiries by mail. We will send you a letter with either a request for more information or a reason why we believe a change to your return may be needed. You can respond by mail or you can request a personal interview with an examiner. If you mail us the requested information or provide an explanation, we may or may not agree with you, and we will explain the reasons for any changes. Please do not hesitate to write to us about anything you do not understand.
If we notify you that we will conduct your examination through a personal interview, or you request such an interview, you have the right to ask that the examination take place at a reasonable time and place that is convenient for both you and the IRS. If our examiner proposes any changes to your return, he or she will explain the reasons for the changes. If you do not agree with these changes, you can meet with the examiner’s supervisor.
If we examined your return for the same items in either of the 2 previous years and proposed no change to your tax liability, please contact us as soon as possible so we can see if we should discontinue the examination.
If you do not agree with the examiner’s proposed changes, you can appeal them to the Appeals Office of IRS. Most differences can be settled without expensive and time-consuming court trials. Your appeal rights are explained in detail in both Publication 5, Appeal Rights and Preparation of Protests for Unagreed Cases, and Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund.
If you do not wish to use the Appeals Office or disagree with its findings, you may be able to take your case to the U.S. Tax Court, U.S. Court of Federal Claims, or the U.S. District Court where you live. If you take your case to court, the IRS will have the burden of proving certain facts if you kept adequate records to show your tax liability, cooperated with the IRS, and meet certain other conditions. If the court agrees with you on most issues in your case, and finds that our position was largely unjustified, you may be able to recover some of your administrative and litigation costs. You will not be eligible to recover these costs unless you tried to resolve your case administratively, including going through the appeals system, and you gave us the information necessary to resolve the case.
Publication 594, The IRS Collection Process, explains your rights and responsibilities regarding payment of federal taxes. It describes:
Publication 1660, Collection Appeal Rights for Liens, Levies, Seizures and Installment Agreement Terminations, explains your collection appeal rights.
Innocent Spouse Relief
Generally, both you and your spouse are responsible, jointly and individually, for paying the full amount of any tax, interest, or penalties due on your joint return. However, you may not have to pay the tax, interest, and penalties related to your spouse (or former spouse).
New tax law changes make it easier to qualify for innocent spouse relief and add two other ways for you to get relief. For more information, see Publication 971, Innocent Spouse Relief, and Form 8857, Request for Innocent Spouse Relief (And Separation of Liability and Equitable Relief).
You may file a claim for refund if you think you paid too much tax. You must generally file the claim within 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later. The law generally provides for interest on your refund if it is not paid within 45 days of the date you filed your return or claim for refund. Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund, has more information on refunds.
The IRS provides a great deal of free information. The following are sources for forms, publications, and additional information.
Tax Topic 203 – Failure to Pay Child Support
Federal Non–Tax Debts, State Income Tax Obligations and Unemployment Compensation Debts
The Department of Treasury’s Financial Management Service (FMS), which issues IRS tax refunds, has been authorized by Congress to conduct the Treasury Offset Program. Through this program, your refund or overpayment may be reduced by FMS and offset to pay any past–due child support, Federal agency non–tax debts, state income tax obligations or certain unemployment compensation debts owed a state (namely debts for compensation that was paid due to fraud or for contributions due to a state fund that were not paid due to fraud).
You can contact the agency with which you have a debt, to determine if your debt was submitted for a tax refund offset. You may call FMS at the number below for an agency address and phone number. If your debt was submitted for offset, FMS will take as much of your refund as is needed to pay off the debt and send it to the agency you owe. Any portion of your refund remaining after offset will be issued in a check to you or direct deposited for you.
FMS will send you a notice if an offset occurs. The notice will reflect the original refund amount, your offset amount, the agency receiving the payment, and the address and telephone number of the agency. FMS will notify the IRS of the amount taken from your refund. Contact the agency shown on the notice if you believe you do not owe the debt or you are disputing the amount taken from your refund. If a notice is not received contact FMS at 800–304–3107 or TDD 866–297–0517. The available hours are Monday through Friday 7:30AM to 5:00PM CT. Contact the IRS only if your original refund amount shown on the FMS offset notice differs from the refund amount shown on your tax return.
If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund you may request your portion of the refund by filing Form 8379 (PDF), Injured Spouse Allocation. Attach Form 8379 to your original Form 1040 (PDF), Form 1040A (PDF), or Form 1040EZ (PDF) or file it by itself after you are notified of an offset. If you file a Form 8379 with your return, write “INJURED SPOUSE” at the top left corner of the Form 1040, 1040A, or 1040EZ. IRS will process your allocation request before an offset occurs. If you file Form 8379 with your original return, it may take 11 weeks for Electronic Filed returns or up to 14 weeks from the date of filing if you file a paper return, to process your return.
If you are filing Form 8379 by itself, it must show both spouses’ social security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required forms to avoid delays. Do not attach the previously filed Form 1040 to the Form 8379. Send Form 8379 to the Service Center where you filed your original return. Allow at least 8 weeks for IRS to process your allocation request. We will compute the injured spouse’s share of the joint return for you. If you lived in a community property state during the tax year, we will divide the joint refund based upon state law. For additional information, FMS can be reached at 800–304–3107 or TDD 866–297–0517.
Payroll Tax Cut to Boost Take-Home Pay for Most Workers
IR-2010-124, Dec. 17, 2010
WASHINGTON ? The Internal Revenue Service today released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011.
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. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.
The new law also maintains the income-tax rates that have been in effect in recent years.
Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011. Notice 1036, released today, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days.
The IRS recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems. For that reason, the agency asks employers to adjust their payroll systems as soon as possible, but not later than Jan. 31, 2011.
For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2011.
Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form.
As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms. Publication 919, How Do I Adjust My Tax Withholding?, provides more information to workers on making changes to their tax withholding.
Successful Entrepreneurs know how to choose and use attorneys.
A lawyer is the first professional advisor that a successful entrepreneur consults with.
I have been following Nina Kaufman‘s Lex Appeal Newsletter and have found it extremely helpful. The latest issues pointed me to an article published on Entrepreneur.com , titled:
How to Choose and Use Attorneys
Here are five important points and questions to consider:
Read the full article: How to Choose and Use Attorneys
Visit Nina Kaufman’s: Ask The Business Lawyer
What is The Taxpayer Advocate Service?
The Taxpayer Advocate Service is Your Voice at the IRS!
Taxpayer Advocate Service (TAS) Mission: As an independent organization within the IRS, we help taxpayers resolve problems with the IRS and recommend changes that will prevent the problems.
Here are seven things every taxpayer should know about TAS:
1. TAS is your voice at the IRS.
2. Our service is free, confidential, and tailored to meet your needs.
3. You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn’t working as it should.
4. TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. This includes businesses as well as individuals.
5. TAS employees know the IRS and how to navigate it. We will listen to your problem, 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.
6. TAS has at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. You can call your local advocate, whose number is in your phone book, in Publication 1546, Taxpayer Advocate Service — Your Voice at the IRS, and on our website at Contact Your Advocate. You can also call our toll-free case intake line at 1-877-777-4778.
7. You can learn about your rights and responsibilities as a taxpayer by visiting our online tax toolkit at www.taxtoolkit.irs.gov .
Tax Topic 202 – Tax Payment Options
There are various options for payment of an outstanding federal income tax liability. Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay in full as soon as you can to minimize the additional charges. Penalties are also assessed for failure to file a tax return so you must file immediately even if you cannot pay your balance in full.
You may pay your tax liability by sending a check or money order, made out to “United States Treasury.” You may pay by transferring money electronically from your bank account. The Electronic Payment Options page on the IRS.gov website explains how to make an electronic payment. You may also pay by credit card by calling 888-872-9829, 888-729-1040, or 888-972-9829, or by debit card by calling 866-472-9829. A convenience fee paid to a service provider, not the IRS, may be charged for electronic payments from your bank account or for a payment by credit card. If you cannot pay in full you should pay as much as possible to reduce the accrual of interest on your account. Please refer to Topic 158 for information needed to ensure that your payment is credited properly.
You should consider financing the full payment of your tax liability through loans, such as a home equity loan from a financial institution or a credit card cash advance. The interest rate and any applicable fees charged by a bank or credit card are usually lower than the combination of interest and penalties imposed by the Internal Revenue Code. If you cannot pay in full immediately, the IRS offers a short amount of additional time, up to 120 days, to pay in full. No fee will be charged for entering this type of payment arrangement.
An installment agreement would allow you to make a series of monthly payments over time. The IRS offers various options for making monthly payments such as:
A one-time installment agreement fee of $105.00 will be charged when you enter into an installment agreement unless you choose to pay through a Direct Debit from your bank account, in which case the fee is $52.00. Taxpayers with income at or below 250% of the Department of Health and Human Services poverty guidelines can apply to pay a reduced user fee of $43.00. You can request the reduced fee using Form 13844, Application For Reduced User Fee For Installment Agreements.
Please note: The user fee for restructuring or reinstating an established installment agreement is $45.00 regardless of income levels or method of payment.
If you can pay your balance in a shorter period of time, you can request a short amount of additional time, up to 120 days, to pay in full. This payment arrangement does not carry a fee.
If you decide on entering into an installment agreement, your monthly payment should be based on your ability to pay and should be an amount that can be paid each month to avoid defaulting.
You will need to specify the amount you can pay and the day (1st-28th) you wish to make your payment each month. The IRS will expect to receive the payment ON the day you indicate so be sure to figure mailing time into the date you select. The IRS will respond to your request, usually within 30 days, to advise you as to whether your request has been approved, denied or more information is needed.
Direct debit or payroll deduction installment agreements provide an opportunity to make timely payments automatically and reduce the possibility of default. For a direct debit installment agreement you will need to provide your checking account number and your bank routing number to initiate the automated withdrawal of the payment.
You may contact the IRS by phone or in person, or you may submit Form 9465 (PDF), Installment Agreement Request, through the mail. The form has space for you to write in your checking account number and your bank routing number, or you may staple a voided check to the form.
To initiate a payroll deduction installment agreement, submit Form 2159, Payroll Deduction Agreement. Form 2159 must be completed by your employer. The IRS will set up a regular installment agreement for you and convert it to a payroll deduction agreement upon receipt of the completed form from your employer.
Please visit Payment Plans, Installment Agreements on the IRS.gov website for more information about installment agreements.
Responding to your IRS Notice
It is important not to ignore an IRS notice. If you do not pay your tax liability in full or make an alternative payment arrangement, the IRS is entitled to take collection action. You may refer to Topic 201 for information about “The Collection Process.”
If you are unable to make any payment at this time, please have financial information available (e.g., pay stubs, lease or rental agreement, mortgage statements, car lease/loan, utilities) and call the appropriate number below to receive assistance:
You have rights and protections throughout the collection process. If you would like information on making arrangements to pay your bill, installment agreements, and what happens when you take no action to pay, refer to Publication 594 (PDF), The IRS Collection Process, and Publication 1, Your Rights as a Taxpayer.
Tax Deductible Donation Top Ten Tips
When preparing to file your federal tax return, don’t forget your contributions to charitable organizations. If you made qualified donations last year, you may be able to take a tax deduction if you itemize on IRS Form 1040, Schedule A.
Ten tips to help ensure your contributions pay off on your tax return:
10. Contributions must be made to qualified organizations to be deductible. You cannot deduct contributions made to specific individuals, political organizations and candidates.
9. You cannot deduct the value of your time or services. Nor can you deduct the cost of raffles, bingo or other games of chance.
8. If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
7. Donations of stock or other property are usually valued at the fair market value of the property. Special rules apply to donation of vehicles.
6. Clothing and household items donated must generally be in good used condition or better to be deductible.
5. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For donations by text message, a telephone bill will meet the record-keeping requirement if it shows the name of the organization receiving your donation, the date of the contribution, and the amount given.
4. To claim a deduction for contributions of cash or property equaling $250 or more you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
3. If your total deduction for all noncash contributions for the year is over $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
2. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.
1. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A.
For more Tax Information Visit:
Tax Topic 201 – The Collection Process
If you do not pay in full when you file your tax return, you will receive a bill. This bill begins the collection process, which continues until your account is satisfied or until the IRS may no longer legally collect the tax, for example if the collection period has expired.
The first notice you receive will be a letter that explains the balance due and requires payment in full. It will include the tax plus penalties and interest added to your unpaid balance from the date the tax was due. You can pay by sending the IRS a check or money order, payable to United States Treasury, with a copy of the notice. You may also pay by credit card by calling 888-872-9829, 888-729-1040, or 888-972-9829, or by debit card, by calling 866-472-9829. A convenience fee paid to a service provider, not the IRS, will be charged for payment by credit card or debit card.
If you cannot pay in full, you should send in as much as you can with the notice. Refer to Topic 202, Tax Payment Options, for alternatives available for paying. The unpaid balance is subject to interest compounded daily and a monthly late payment penalty. It is in your best interest to pay your tax liability in full as soon as you can to minimize additional charges. You also might want to consider obtaining a cash advance on your credit card or a bank loan. The interest rate your credit card or bank charges and any applicable fees may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. Paying off your tax debt by using a credit card, obtaining a cash advance or a bank loan may also keep your tax debt from negatively affecting your credit rating.
If you are unable to pay your balance in full, we may be able to offer you a monthly installment agreement. You can use the Online Payment Agreement (OPA) or you can complete and mail an Installment Agreement Request, Form 9465 (PDF), with your bill. The option to have the payment directly debited from your bank account is available by simply completing lines 11a and b of Form 9465. Direct debit installment agreements require a lower fee than other installment agreements and help you avoid defaulting the agreement by providing you with the ability to make timely payments automatically. Some installment agreements can be established over the telephone. Refer to Topic 202, Tax Payment Options, for more information. If you are experiencing a financial hardship and are unable to pay anything, we may temporarily suspend collection action. Please call the phone number listed on your bill to discuss this option. Interest and late payment penalties will continue to accrue while you make installment payments or while collection is suspended. If you are a member of the Armed Forces, you may be able to defer payment. See Publication 3, Armed Forces’ Tax Guide, which may be obtained on our web site, at www.irs.gov., for more information.
If you do not qualify for an installment agreement under any of the payment options, you may choose to propose an Offer in Compromise (OIC). An OIC is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax liability by payment of a reduced amount. Refer to Topic 204, Offers in Compromise, for additional information.
It is important to contact us and make arrangements to pay the tax due voluntarily. If you do not contact us, we may take action to secure payment.
Some of the actions we may take to collect taxes include:
An explanation of this process is as follows:
The federal tax lien is a claim against your property, including property that you acquire after the lien arises. The lien arises automatically when you fail to pay the taxes you owe within ten days after we send our first notice. The government may also file a Notice of Federal Tax Lien, which further protects its interest in your property as a creditor in competition with other creditors in certain situations, such as bankruptcy proceedings or sales of real estate. The filing of a Notice of Federal Tax Lien may appear on your credit report and may harm your credit rating. Once a lien arises, the IRS generally cannot issue a “Certificate of Release of Federal Tax Lien” until the taxes, penalties, interest, and recording fees are paid in full or until the IRS may no longer legally collect the tax.
A Notice of Levy is another method the IRS may use to collect taxes. Levying means that we can confiscate and sell property to satisfy a tax debt. This property could include your car, boat, or real estate. The IRS may also levy assets such as your wages, bank accounts, Social Security benefits, and retirement income. In addition, we will apply future federal tax refunds that you are due, to offset the amount you owe. Any state income tax refunds you are owed may also be applied to your federal tax liability.
You can call the IRS at 800-829-1040 to discuss any IRS bill. Please have the bill and your records at hand when you call.
You have rights and protections throughout the collection process. Please refer to Publication 1, which provides additional information on Your Rights as a Taxpayer. More information on the collection process and your rights is available in Publication 594 (PDF), The IRS Collection Process, and in Publication 1660 (PDF), Collection Appeal Rights. These may be obtained by accessing the IRS web site at www.irs.gov.
Tax Topic 160 – Acquisition or Abandonment of Secured Property and Cancellation of Debt
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the canceled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven or the property is abandoned or foreclosed, the amount you received as loan proceeds is reportable as income. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-A, Acquisition or Abandonment of Secured Property, or Form 1099-C, Cancellation of Debt.
If you received a Form 1099-A (PDF), or Form 1099-C (PDF), and the information is incorrect, contact the lender to make corrections. For additional information on foreclosures and abandonments, refer to Publication 544, Sales and Other Dispositions of Assets, under the section called “Foreclosures and Repossessions.”
Some canceled debts are not includible or fully includible in income. For example, if you have canceled debt on your principal residence, you may be able to exclude part or all of the amount canceled from your income under the Mortgage Forgiveness Debt Relief Act of 2007. For additional information, refer to Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for individuals), Topic 431, Canceled Debt-Is it Taxable or Not?, and Form 982 (PDF), Reduction of Tax Attributes Due to Discharge of Indebtedness (And Section 1082 Basis Adjustment), instructions.
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