My guest blogger today is Dagny Kight. She has an upcoming ebook called Lower Your IRS Debt which will help individuals with a step-by-step process to determine on their own if they can settle their tax debt for a lower amount.

Are you old enough to remember when we bought magazines through the mail in the hopes that the Prize Patrol would show up with a giant check? The marketing strategies of the famous publishing house sweepstakes are perhaps best remembered by the tagline, “You may have already won!” The ambiguous catchphrase led many people to believe they were indeed the lucky winner!

Tax resolution firms make heavy use of direct mail. You may have already started receiving their letters, particularly if the IRS has filed a Federal lien against you. The envelope will be made to look official. You will be urged to “Respond Immediately! Important Information About Your Tax Debt!”

When you open the letter, in many cases it will be from a company with a generic name like “Tax Resolution Specialists” or “Tax Settlement Department.” They will get the amount of your tax debt from public records so it will look like the letter was written just for you. The letter may claim your IRS debt can be lowered to maybe a third or even a quarter of what you owe. When you’re faced with an IRS tax debt, you may want to rush to the phone and call right away for a deal that good!

The ads are very persuasive because tax resolution firms try to charge thousands of dollars. If their fee and the amount of savings they claim they can get for you are many thousands of dollars less than your total IRS debt, wouldn’t you be tempted to sign on the dotted line? That’s what tax resolution firms are counting on!

Remember these two important facts:

1. NO ONE can “estimate” what your tax savings might be without calculating your complete financial disclosure.
2. NO ONE can guarantee how the IRS will decide when they review your complete financial disclosure.

I have an upcoming ebook, Lower Your IRS Debt, which will help you calculate your own financial disclosure and submit an application to the IRS for review. No matter how you ultimately complete your tax settlement, a complete financial disclosure will be required. I’ll take you step by step through the process I used successfully to lower my IRS debt from $42,564 to $1!

Daniel Stoica Accounting Professional

Today’s post is by Michael Rozbruch, Founder and CEO of Tax Resolution Services, Co. (@TaxResolution)

The second (and likely the last) IRS amnesty program for Foreign Bank Account Report (FBAR) violators is set to expire on August 31, 2011. Compliance with FBAR regulations is a serious matter and not to be taken lightly.  The strict requirements of the Foreign Bank Account Report (FBAR) must be adhered to by Americans with offshore accounts since foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions.  If you have undeclared funds in foreign bank accounts, this is an opportunity for you to minimize severe tax penalties and/or chances of criminal prosecution.

The 2009 Offshore Voluntary Disclosure Program resulted in more than 14,700 Americans with secret offshore accounts coming forward and taking the IRS up on their offer of tax amnesty for voluntary disclosure. In doing so, they avoided criminal prosecution if they paid FBAR back taxes, interest and reduced civil penalties. According to the IRS, the 2009 FBAR amnesty program generated “billions of dollars” in new revenue from back taxes. With global banks under more pressure than ever to disclose U.S. accounts, those people with their accounts offshore are strongly encouraged to report and settle taxes due before the 2011 amnesty deadline expires.

All offshore reporting activity is being managed through the IRS’s Criminal Investigation Division (CID). The Foreign Bank Account Reporting (FBAR) penalties for not filing and meeting the amnesty guidelines are severe:
•            FBAR penalties can exceed 100% of the value of the asset, plus tax penalties and interest.
•            If CID makes a referral to the U.S. Department of Justice for felony indictment, the criminal sanctions can be as much as up to 5 years in prison.

Navigating the complex waters of offshore account reporting can be overwhelming. Mistakes are very costly if taxpayers don’t know how to report correctly. FBAR compliance is a serious matter, and global banks are getting more pressure than ever to disclose U.S. accounts, so this is the time to get these matters settled – but I strongly suggest that you do this with help from experts.  You can’t afford to not take advantage of the second amnesty program offered by the IRS. Having expert tax professionals on your side when reporting offshore bank accounts is a small investment that can make a big difference financially, emotionally and legally.

To learn more, follow these resources:

• FBAR and Offshore Account Disclosure

• FBAR Amnesty & The Offshore Voluntary Disclosure Initiative (OVDI)on Cafe Tax

• Offshore Tax Settlements on Tax Resolution University

About the author: Michael Rozbruch is a recognized tax expert and the Founder and CEO of Tax Resolution Services, Co. To learn more visit, www.taxresolution.com

Today’s post is by Michael Rozbruch,  Founder and CEO, Tax Resolution Services, Co. (@taxresolution)

Back tax debt happens to many people.  The IRS does not discriminate – they aim to collect overdue taxes from everyone, including celebrities. Famous people have IRS troubles just like average people.

Some celebrities seem to think they are immune from IRS trouble, but as countless celebrity tax cheats have learned, no one is beyond the long arm of the IRS sniffing out unpaid tax problems.  Let these celebrity tax cheaters’ pains be your gain. Here are some important tax evasion lessons you can learn from these celebrity tax cheaters:

Sophia Loren’s celebrity tax cheating lesson: Even an innocent spouse can end up doing jail time. The tax evasion case against the Italian screen siren had more to do with her celebrity tax cheater husband Carlo Ponti’s unpaid taxes, but Loren ended up doing 17 days of a 30-day sentence in a Naples jail for tax evasion. If you file a joint return, your neck is on the tax evasion line for your tax cheater spouse’s taxes. Many couples appoint one partner to handle the finances. If you feel your tax cheater spouse hasn’t been faithful with their taxes, take your returns to a tax attorney or tax resolution specialist to see if you qualify for innocent spouse relief. 

Abbott and Costello’s celebrity tax cheating lesson: Don’t let your nice guy image get in the way of avoiding a tax evasion problem. Although he played the fool in the movies, Lou Costello (the dumb one of the comedy duo) was the more astute businessman and Bud Abbott (the smart one) was constantly making bad business decisions.  

Sometimes our self or public image prevents us from being assertive with our business and financial advisers when it comes to the topic of tax evasion. This lack of follow-through cost the celebrity tax cheating comedy duo dearly. According to Wikipedia, in 1956, the Internal Revenue Service charged the celebrity tax cheaters with tax evasion, forcing them to sell their homes and most of their assets, including their lucrative film rights. In 1957 they formally dissolved their partnership. Don’t let a tax evasion problem destroy your partnerships, always asks tough tax evasion questions of your financial team!

Wesley Snipes’s celebrity tax cheating lesson: Write your politics on your blog, not on your tax forms. According to his tax evasion trial coverage, one of the reasons celebrity tax cheater Wesley Snipes didn’t file his tax returns was due to bad tax evasion advice that was politically motivated. Although failure to file your taxes is a misdemeanor, celebrity tax cheater Snipes was sentenced to three years of jail time and millions in back taxes and tax evasion penalties. You may have heartfelt political or religious feelings about how your taxes are used, or even the validity of the U.S. Government to levy taxes, but put those tax evasion thoughts in your blog, not on your tax forms. Once you file (or don’t file) your taxes, it becomes tax evasion, which can send you to jail.  

 Richard Hatch’s celebrity tax cheating lesson: Don’t “forget” to pay taxes on income (especially when 51 million people saw you get it). As the first winner on Survivor, celebrity tax cheater Richard Hatch argued that he wasn’t guilty of tax evasion because he believed that CBS had paid the taxes on his million-dollar win (despite clear language in his contract explaining that he was liable for paying all taxes). If you get advice that says you don’t have to pay taxes on income, get a second opinion. If you make serious bucks, have your financial team’s tax work audited by another firm.  

 Darryl Strawberry’s and Pete Rose’s celebrity tax evasion lesson: What part of INCOME taxes don’t you get? At one time, celebrity tax cheaters Darryl Strawberry and Pete Rose were baseball’s biggest stars, making their autographed memorabilia very valuable. While these celebrity tax cheaters could rattle off their statistics for every season, the one figure they forgot to include was the income from autograph and memorabilia shows. When they autographed their tax returns without that income, they became celebrity tax evaders. Celebrity tax cheater Strawberry was ordered to pay $450,000 in back taxes, while celebrity tax cheater Rose had to pay $366,000 and went to jail for five months for tax evasion. If you’ve “forgotten” some income (such as eBay profits), you’re a tax cheater.

To read more, here is the most recent round up of “Celebrity Tax Woes” stories shared on our blog. 

R&B star R.Kelly owes more than $837,000 in delinquent federal taxes

Rapper Ja Rule Sentenced for IRS Tax Problems

Wesley Snipes’ Appeal Rejected

Back Taxes Owed by “Celebrity Apprentice” Star Marlee Matlin

Tax Lien Filed Against Actor Nicholas Cage Who Owes Over $620,000 in Back Taxes

You may envy the fortune and glory of these celebrity tax cheaters, but if you take these celebrity tax evasion lessons to heart, you’ll have something more valuable than fame or fortune. You’ll have your financial and personal freedom.

About the author: Michael Rozbruch is a recognized tax resolution expert and the Founder and CEO of Tax Resolution Services, Co. To learn more,  visit www.taxresolution.com 

Posted by:  Daniel Stoica Accounting Professional