ARE YOU PAYING SOMEONE ELSES TAXES ?

Have you seen the news lately?According to the Us Treasury, Business are creating a huge tax gap, and it has been going on for year's. This means they owe the taxes but they are just not voluntarily paying, and in most cases not reporting the tax. The same business are reporting great gains to their investment boards and share holders. They do this in order to keep investment money, and lines of credit flowing into the company.

"There are three key characteristics of the tax gap:
• Over 70 percent of the gross tax gap is attributable to the individual income tax,
which is the largest single source of Federal receipts.
• Over 80 percent of the gross tax gap is caused by under reporting of tax (i.e., by
under reporting income or overstating deductions and credits), with roughly half this
amount (including self-employment tax) attributable to under reporting of net business
income by individuals. Eighteen percent of the gross tax gap is attributable to
underpayments of taxes or failure to file tax returns.
• Noncompliance is highest among taxpayers whose income is not subject to third party
information reporting or withholding requirements.
These characteristics suggest a targeted response designed to address the most significant
areas of noncompliance. The following overview discusses these characteristics
As indicated above, the IRS estimates that over 70 percent of the gross tax gap is
attributable to the individual income tax. "

"Moreover, while it may be possible to develop a comprehensive strategy that reduces the
tax gap, it is not possible to implement a policy that would come close to eliminating the
tax gap without an unacceptable change in the fundamental nature of our tax compliance system"

Tax Gap Strategy Timeline for Fiscal Year 2007

January
• Taxpayer Advocate’s Annual Report to Congress
• Update of 2006-2007 Treasury Department/IRS Priority Guidance Plan
• Launch of Federal/State Electronic Federal Tax Payment System (EFTPS).
• Deliver Taxpayer Assistance Blueprint Phase II Report to Congress

February
• Administration’s fiscal year 2008 budget request, including anticipated legislative proposals for compliance initiatives, tax code simplification and IRS funding

March/April
• Detailed outline of IRS tax gap strategy reflecting provisions in Administration’s fiscal year 2008 budget request
o Outline steps to reduce opportunities for evasion
o Outline IRS research initiatives
o Outline IRS information technology initiatives
o Outline IRS compliance initiatives
o Outline IRS taxpayer service initiatives
o Outline steps to reform and simplify the tax law

May
• Stakeholder meetings to discuss Administration’s fiscal year2008 budget request

June
• Treasury Department review of practitioner compliance initiatives

July
• 2007-2008 Treasury Department/IRS Priority Guidance Plan.

The IRS and US TREASURY are committed to flushing out these companies. Revenue Officers are getting tougher on compliance and enforcement trying to make examples out of the business they are able to get now. My advice as a Tax Consultant in a prominent firm is to seek legal representation NOW

Haven't filed a tax return in awhile? You may owe the IRS!

If you haven't filed a tax return in a few years, you may still owe the IRS. You may have even been suprised when you received a Balance Due Notice in the mail from the IRS for years you haven't filed.

The reason for this is the SFR. An SFR stand for Substitute for Return. When you go more than 2 years without filing a return, the IRS might prepare a return for you. They will file you single with standard deductions. You will not get any other deductions that might be beneficial to you. Once they prepare a return for you and you owe tax, they will file that return and assess the tax against you. If they prepare a return for you and you are due a refund, they will not file that return. Thus, you will not get your refund. It is not in the best interest of the Treasury to hand out money on returns not filed by the tax payer.

Once your tax has been assessed, they will put you in the collections letter cycle.

Even though you have a SFR, you can still file a return on top of it with all of your deductions included and you correct filing status. This will file over the SFR and adjust your tax liability, but it will take months to process, so in the meantime, you need to be in a resolution with your supposed liability or the IRS will enforce collections (even if your return shows you don't owe). Doesn't seem fair but that's the way it is.

This is one of those areas where professional representation might be your best bet. It is very tricky when filing over SFRs and when filing old returns. If your returns don't match up to IRS records, you will be red-flagged for an audit for sure, delaying the whole process and even resulting in more penalties.

JUST DO IT !

The Nike philosophy is a universal truth that can save you money! As a senior tax consultant in a major tax resolution firm, I see cases all the time that could have been half the price for resolution. Every 4 years you don't handle a tax liability, it DOUBLES! I understand when folks tell me that they got scared. Fear and procrastination will cost them much more than they think. The common symptom most people have with tax problems is analysis paralysis. Action is what ignites every success. Action is what produces results. Knowledge is only potential power until it comes to someone who knows how to get himself to take effective action. If you want to reduce the amount you have to pay the IRS, then do your home work on some PROFESSIONAL TAX RESOLUTION FIRMS and JUST DO IT!

Levy notice from the IRS and what it means to you.

Like so many tax payers, this could happen to you. You get a certified letter form the IRS. When you pick it up from the post office and open it, you read that the IRS intends on levying certain assets.

Don't panic!

This means that you have not responded to the IRS's other letters they have been sending you. The IRS can not levy you until you have been through the collection due process. Simply put, they have to notify you of a balance due and give you time to respond.
If you get a CP 504, intent to levy, there is still time to handle your problem.
You do need to get moving right away, because doing nothing will only result in the IRS taking your assets away.

If you are unsure of what steps to take next, it might be time to hire a reputable tax resolution firm. A tax resolution firm can help you out tremendously; they know how to deal with the IRS and can get you back onto the road to recovery and peace of mind.