IRS - Hitman

Tax Debt Myths: Real Ways to Stop an IRS Tax Levy, and Myths to Avoid

2009-11-25T09:47:00.003-05:00

Have a Happy Thanksgiving Weekend everyone! I'll be out of the office until Monday, but please continue to send your IRS questions or concerns my way. I'll be glad to help you.

Getting This Far: You were warned. The IRS sent you notice after notice, which were promptly ignored. Now you got the last notice from the IRS. And it said “Final Notice and Intent to Levy.” It's certified mail, and it looks serious. And it is. The IRS can levy your bank account or garnish your paycheck if you don't act now. So read carefully, and be sure to avoid some common misconceptions.

To keep the IRS from levying your assets, just transfer the ownership!
Not so fast. If you already received that Final Notice, the IRS is keeping a close eye on you and your assets. If you transfer your assets to a friend, coworker, family members, or anyone determined to be close to you, the transfer will be deemed “fraudulent.” This can result in a civil lawsuit.

You can lie to the IRS about your assets, they will never find out.
The IRS can and will find out. You have the right not to answer the IRS's questions. But it's a violation of Federal law to lie to them about your assets. This can result in criminal charges. Don't forget, the IRS can search public records to find out what you really own. And if that doesn't work, they can send a Revenue Officer to your door and ask about your assets face to face.

Hide your Assets, this is completely legal!
No, it's not. Actively hiding your assets from an IRS collector is illegal. Your assets are not even safe in safety deposit boxes. When I was an IRS Hitman, I was easily able to use the computer to locate those.

File For Bankruptcy, The IRS cannot seize your property if you do.
Not usually. Bankruptcy will not help you escape your Tax Levy, especially if you have assets and can pay your debt. Tax liens and levies usually survive bankruptcy. And if you have any assets/money that could be used to satisfy your debt, they will be seized and used to satisfy your debt. Plus, filing for Bankruptcy extends the statute of limitations on your IRS Debt.

The Real Deal: There's only one way to stop an IRS Levy. And that's contacting the IRS and discussing how you're going to pay your bill. You can submit an Offer in Compromise, propose an installment agreement, or request a hardship plan. None of this will be easy, but they are the only real options for stopping a levy. Act fast, and don't let the IRS seize your assets.

I’m Richard Close and I was a “Hitman” for the IRS. I was a second generation revenue officer. I took out anyone who owed the IRS money as my father had before me. Now I help thousands of Americans beat Uncle Sam and save thousands of dollars. Tax problems? Contact me and get free tips and techniques to deal with wage and bank seizures and slash tax debt: email me at IRS-Hitman@taxdefensenetork.com or call 1-888-248-9058. Visit me http://irs-hitman.blogspot.com or www.taxdefensenetwork.com

IRS Tax Debt: Income Dropped? Two ways to Get out From Under Tax Debt

2009-11-24T10:28:00.000-05:00

Empty Wallets: There's no jobs out there. Even if you're a college graduate, the pickings are slim. More and more people are having to settle for low income jobs until something better comes along. So what can you do when your pay is low and your IRS debt is huge? First, don't panic. And Second, stop ignoring it. There are still solutions for getting your huge Tax Debt off of your back.

No Way Out: Let me give you a friendly warning. When I was an IRS Hitman, I heard all kinds of excuses. Usually, people told me, “I just don't have the money to pay!” But that never phased me. You'll have to do better than that. You need the tools to actually fight your debt, not just complain about it.

You Need to know that the IRS can not make you go without basic needs. Your basic needs include food, housing, basic clothing, transportation, tools for work, and school supplies/books. If paying any amount of money on your Tax Debt would make you go without any of those basic needs, you do not have to pay your Tax Debt.

Fight Back: Here are good options for people with low incomes.

- Hardship Plan: This is also known as “Suspended Collections.” The IRS will carefully weigh the amount of money you make versus the amount of money you are allowed to have for your basic needs. If the amount of money you make is only enough to satisfy your basic needs, you'll qualify. The IRS will then suspend collections activities. The amount of time varies, sometimes you'll get over a year to get your finances in order. But this is NOT a permanent solution for your debt. Once the grace period is up, the IRS collection efforts will resume full force.

- Offer in Compromise: You can settle your IRS debt for less. But don't think this is easy to do. You'll have to provide lots of evidence proving that there is no way you can ever pay your debt in full. Then you have to take a look at the 44 page long application and fill everything out. When you send the document in, you have to send 20% of your offer. If you make a mistake and your offer is not approved, the money is nonrefundable. If you are not approved the first time, consider getting professional help the second time around.

Be Careful: Applying for a hardship plan or an offer in compromise is hard work, and is even harder to qualify for, but they are the best options for people with little to no income. Remember, if you ignore your debt; interest and penalties will continue to accrue on your account. Don't let the IRS extort you for all you're worth. Face the music, and pay it off!

IRS Tax Problems: Avoid Tax Fraud and Stay Out of Jail

2009-11-23T09:51:00.004-05:00

You're Under Arrest. You think you can get away. But you can't. The IRS Hitmen are trained to recognize Tax Cheater's patterns. They can see the trail of lies and follow it straight to you. Maybe you underreported your income, maybe you made a false claim, or maybe you just made a simple mistake. It's still against the law. And you can go to jail.

Biggest Cheaters: Most people who commit Tax Fraud are middle-income. The worst offenders work in the service industry. For example, most underreporting of income is by restaurateurs, clothing store owners, car dealers, telemarketers, salespeople, doctors, lawyers, accountants, and hairdressers.

3 Common Methods: The 3 common ways people commit fraud.

1. Underreporting: Yes, underreporting is a crime! This is listing your income as less than it actually was.

2. False Claims: Usually, people claim a spouse or children that they don't have.

3. Innocent Mistakes: If you make an honest mistake on your IRS paperwork you usually won't be penalized.

“Badges of Fraud” IRS Auditors are trained to spot these common signs of Tax Fraud.

- Not listing entire sources of income
- Overstating deductions by a huge margin
- Huge amounts of “personal expenditure” deducted as business expenses
- Keeping two sets of books or no books
- Taxpayer transferring all of their property
- Taxpayer has a close relationship with all parties who received the transfer

Do The Crime pay the time. Jail time for Tax Fraud is rare. But the older the case is, the higher your chances of going to jail become. Tax Evasion caries the punishment of five years. Filing false statements can land you in jail for three years. In both cases, you can also be fined up to $250,000. In addition, you'll have to pay the court costs. Fraud doesn't pay!
Watch out! Maybe your friends or family told you it's “Okay” to make false claims or underreport your income. Don't take bad advice. Look at the facts. The IRS uses people called “Special Agents” to check for Tax Fraud. They work in the IRS Criminal Investigations Division (CID). They're highly trained detectives, they even have badges and guns! If you think you can get away with committing Fraud, think again.

* This post has been replaced with content from the archives as it was revealed that TMZ made a mistake. A Michael Phelps does owe over $20K to the ITS, but no the Olympic Record holder.

IRS Tax Debt: Put the Collections Machine on Hold and Get More Time To Pay

2009-11-20T09:04:00.001-05:00

Procrastination: Don't procrastinate with the IRS. You may have received some notices in the mail. They may not look important, but they are. And if your put your dead off long enough, the IRS can unleash it's weapons of collections on you.

Automated Collections 101: If you ignore the notices the IRS mails you, your account is sent to the Automated Collections System (ACS). This is the area of the IRS that can Seize your assets, Levy your Bank accounts, and Garnish your wages.

Buying Time: If you ignored your IRS debt, it's probably already too late. But there are certain ways you can buy time.

Short-Term Hold: This usually doesn't work, but it's worth a shot. You can call the IRS and request a short-time hold. This could be anywhere from one week to 60 days. After you call the IRS, send them a written request for more time along with the photocopy of the notice you were sent.

Long-Term Hold: It's even harder to get a hold on your account that is longer than 60 days. You have to call the IRS and ask them to classify your account as a “Hardship Case.” If your situation is truly dire, a reprieve from debt collections for a year. But your have to provide plenty of evidence to support this. You need documents proving you cannot pay your debt. And IRS Hitmen are not known for their sympathy.

Getting Help: Did the IRS refuse to give you a long-term or a even a short-term hold. Then you have to face the music and find a way to pay your debt. At this stage, it's going to be really tough. You already tried one or two excuses that didn't work and the IRS doesn't like stalling tactics. You may need professional help at this point.

Window of Opportunity: The key here is acting on your debt as early as you possibly can. If you know you cannot pay your taxes, let the IRS know and research a plan. And respond to an IRS letter as soon as possible. Do this, and you can save thousands of dollars.

Aaron Carter Owes $ 1 Million in IRS Tax Debt

2009-11-19T10:04:00.003-05:00

Yet another celebrity owes IRS Tax Debt... This time it's Aaron Carter, a 21-year-old former Dancing With the Stars Contestant and younger brother of Backstreet Boy member Nick Carter.

According to court documents, Aaron Carter owes more than $965,000 from 2003 alone. An additional $45,350.11 is also owed from income earned in 2006.

In a statement, Carter's manager Johnny Wright states:

"It is unfortunate that while Aaron was a minor, his finances were grossly mismanaged by his previous team which has lead to the current situation of which he was unaware of until today. Aaron is working with a new team to take appropriate actions towards speedy resolution of the matter and looks forward to putting this behind him and moving forward with the next stage of his music career."

It's clear that Aaron Carter's tax debt is a result of mismanagement, as he owed debt from 2003 when he was 15 years old. This is a classic example of the importance of hiring qualified accountants- you don't want to end up in tax debt for their mistakes!

Food for Thought: Two contestants from the popular show "Dancing with the Stars" have landed in Tax Debt. The first was Helio Castroneves, now it's Aaron Carter who's in the hot seat. Sometimes you have to wonder, is the IRS making examples out of contestants on a popular TV show to prove a point to the millions of Americans watching? Why wasn't a Tax Lien filed in 2003 when Aaron Carter owed over $900,000?

You May Owe the IRS Unexpectedly Come Tax Time

2009-11-18T10:32:00.004-05:00

Breaking News: Several million Americans will be in for a shock this upcoming tax season. The Treasury Department bill that was designed to stimulate our dire economic condition could hurt your wallet when it's time to pay taxes.

You may have noticed that your paycheck have increased. This was due to the fact that the government lowered federal withholding. But for some, the lowered withholding amount will cost money when tax time rolls around.

The Numbers: A new study released by the Treasury Department reveals that over $15 Million could owe come April because of an over-calculation by the IRS.

The Three Most Affected Groups:

Group 1: Single People with 2 Jobs
If you have two jobs, the tax credit may have been given to each job for a total of $800 but you're only eligible for up to $400 in relief.

Group 2: Married Couples, Both Spouses Working
Couples are only eligible for an $800 total tax break. However, if both spouses make more than $13,000 per year, the new IRS withholding tables gave them a $1,200 tax break- $400 more than the amount allowed!

Group 3: Retirees
Retirees were given a $250 lump sum payment, but this lump sum payment was intended for those who didn't qualify for a $250 tax break. Around $50 million seniors on Social Security got the payment and a $400 tax break!

The $15 million who fall into these target groups can expect less money in a tax refund, or worse, being forced to pay the IRS for the first time. Although the IRS believes the amount of people estimated to be victims of the mix up was exaggerated by the Treasury Department, they're working on waivers for those might owe underpayment penalties.

Tax Amnesty is NOT a Magic Cure for Tax Debt

2009-11-17T10:09:00.002-05:00

Lately, a lot of commercials talk about the Tax Amnesty program in a VERY misleading manner. The IRS's Tax Amnesty program is ONLY for those with overseas accounts to avoid criminal prosecution IF they come forward and pay all taxes, penalties, and interest on the amount they owe the IRS.

Don't let an unreliable tax preparer steer you down the wrong path. Here's a list of questions you need to ask to make the best choice if you choose to work with a professional.

Questions to Ask:

These questions are determined by the National Society of Accountants. You have the right to answers to every one of these questions before you proceed with a Tax Preparer.

• What credentials do you have? You want to work with certified professionals with excellent track records for success.

• How long have you been in practice? Experience is an excellent indicator that you’re working with a trustworthy individual or company. Look for at least 10 years of experience.

• Have you ever dealt with tax situations like mine? You want to work with a Tax Preparer with a ride range of experience. They should know how to handle every IRS Lien, IRS Levy and any other IRS problem in-between.

• Are you the person who will be handling my return? It’s important to know who will be handling your Tax Issues. You need their name and contact information.

• What organizations do you belong to and do they have a code of ethics? You want your Tax Preparer to be a member of organizations like the Better Business Bureau that require companies and individuals to adhere to a strict set of ethics. Look for the highest ratings possible within these organizations.

You don’t want to owe the IRS or risk an IRS Audit because you chose the wrong Tax Preparer. Remember, if choose the wrong Tax Preparer you can be held liable for all of the damages incurred. If you owe the IRS or have an IRS Lien or IRS Levy issued against you, it’s very important to choose someone you can trust or you run the risk of making your situation

Options to Pay Taxes Owed if You Can't Afford to Pay

2009-11-16T10:14:00.000-05:00

Unemployment rates are at record highs. Many taxpayers simply cannot afford to pay their Tax Debt obligations. However, there is a variety of options available for taxpayers that simply cannot afford to pay.

Currently Uncollectible

Currently Uncollectible or Hardship status is granted to people who cannot afford to pay their IRS tax debt without sacrificing Basic Needs.
The IRS will compare your monthly gross income versus what they consider your "allowable expenses" to determine if you qualify for this program. If you qualify, collection efforts may be extended.

Basic Needs: These include food, housing, clothing, transportation, medical expenses, and insurance. Luxury expenses do not count, not even private school tuition for your children.

Allowable expenses Applying to One Person:
• Food: $227
• Housekeeping Supplies: $28
• Apparel & services: $85
• Personal care products & services: $30
• Miscellaneous: $87

Partial Payment Agreement

With a Partial Payment Installment Agreements you can pay less than the full amount of the tax debt. To apply you must:

- Fill out Form 9465, Installment Agreement Request.
- Fill out Form 433-A, “Collection Information Statement”
- Mail this information to the IRS, along with a letter request a Partial

Payment Installment Agreement.

Partial Payment Installment Agreements drag on the amount of time it takes to pay the debt, sometimes for up to 10 years. Since Penalties and Interest will continue to accrue on the account, this is probably not the best option for resolving the Tax Debt.

Credit Card

Everyone accepts credit. The IRS is no different. If you have cash in your credit cards, use it to pay your Tax Debt. Credit Card companies have lower interest rates and easier payment plants available. Additionally, it’s a very rare occurrence for a Credit Card company to issue a lien or levy.

Loan

The interest rates on loans are far lower than IRS interest rates. If you qualify for a loan with your bank, it’s a good idea to use a loan to pay your debt obligations. Much like paying with a Credit Card, payment options may have more flexibility than the IRS has.

Friends & Family

Nobody wants to ask their friends or family for money. But owing the IRS is truly a desperate situation. Interest and Penalties double and triple your Tax Debt.
Borrowing money from a family member will get the IRS off your back and keep your debt obligation low by not allowing interest and penalties to accrue like it would if you decided to pay with a Credit Card or a Loan.

Signs of the Times

The IRS issued a press releases and statements assuring taxpayers that they were going to go easier on taxpayers that owe money, but they have not held true to the sentiment. The IRS collection budget increases every year. If you owe, you have to find any way possible to pay or resolve the Tax issue.

IRS Tax Levy: IRS Tax Levy Questions and Answers. How to Save Yourself from IRS Debt

2009-11-13T09:25:00.000-05:00

A Dose of Reality: If you owe the IRS, you can't escape your debt. You may wish there was some easy solution for removing a Tax Levy, but there isn't. It's hard to communicate with the IRS. So make sure you arm yourself with tax knowledge before taking the plunge.

How Long does a Levy Last?
It depends. Wage levies are continuous. As long as you work for the same employer, the IRS can continue to withhold a portion of each paycheck. But Bank Levies are usually one-shot deals. The IRS would have to send another warning notice before they seize the money in your bank account again. But beware, the IRS does have the right to seize your assets as long as you owe tax debt but only until the statue of limitations expires.

Can I sue the IRS for levying my assets?
Not exactly. If the IRS has wrongfully levied your assets when you know you didn't owe anything, you would have the right to sue. (Internal Revenue Code 6343B). The IRS would have to return your property or it's value together with interest, and they would also have to pay all Attorney and legal fees. But I'll be frank with you. I've never seen anyone levied against unless they owed the Taxes. Don't try to sue the IRS if you know you owe. You will not win.

Can the IRS levy my business assets?
The IRS can seize assets and even close you down if taxes aren't paid. The IRS can devastate a business by seizing accounts receivable and anything else of value. But these are rare occurrences. If you own a small business, the IRS can't make much money by seizing equipment or fixtures. And you usually won't stand a chance of paying the IRS back if they shut you down. These are good defenses to use if the IRS attempts to levy any business asset.

Helpful Hint: Have your assets already been seized and auctioned off? You still have a small chance at redeeming your property. (Internal Revenue Code 6337) This is called your “Right of Redemption.” This means that you have the right to repurchase the property from the new owner. This is something you should take into consideration if you desperately need the seized item back.

Rapper Flavor Flav Owes $183K+ in Back Taxes

2009-11-12T09:36:00.003-05:00

Flavor Flav (Real Name: William Jonathan Drayton Jr.) member of rap group Public Enemy and reality TV star (The Surreal Life, Strange Love, Flavor of Love), was recently issued an IRS Tax Lien for owing the state of California upwards of $183,000 in back taxes.

Rappers & The IRS: Flavor Flav is a recent one of the handful of rappers that owe the IRS, including NAS, Method Man, and Lil' Kim.

Flavor Flav (William Jonathan Drayton Jr.) who is a member of Public Enemy, also a TV star has been hit with an IRS tax lien for owing the state of California over $183K in back taxes.

Quick Tax Tips for High Earners: Here's what celebrities and other high earners should do to prevent IRS tax issues from "sneaking up on them".

1. Hire an Accountant A reliable accountant is essential when you have your own business, or in the case of some rapper's and celebrities, your own empire. Hiring two or several accountants may be necessary to ensure your financial issues are taken care of and your taxes are paid. When you earn hundreds of thousands, or even millions, you have far to fall when your IRS taxes go unpaid. It will cost less to hire a professional than it will when you owe the IRS.

2. Work with a Reliable Professional Already got beef with the IRS? Quickly work to rectify the issue. Work with a tax attorney or a reliable tax professional if necessary to resolve the issue.

3. Drop Ridiculous Entitlement Issues Actor Wesley Snipes was famously sent to prison for his refusal to pay the IRS. Various groups will ensure high earners that they don't need to pay the IRS- but this obviously couldn't be further from the truth. No matter how famous or rich you are, the taxman wants his cut. You have to pay the IRS and it's ridiculous to thing otherwise.

4. Don't Bank Overseas Resist the hypnotic pull of hiding your funds in Swiss Bank Accounts. The IRS raid of Swiss Banking Giant UBS's accounts made national news. Disclosures were made, Americans were caught. The IRS even allowed taxpayer's with overseas accounts to voluntarily disclose their actions- or get caught the hard way. You will not get away with hiding funds in this economical climate.

Lessons: No matter who you are or what you do, you have to pay your taxes. It's astounding that thousands of people every year think they're exceptions to the rule. If you don't pay, it may take a while, but you will get caught.

IRS Seeks to Return $123.5 Million in Undeliverable Refunds- Could you Be One of Them?

2009-11-11T10:21:00.003-05:00

Breaking News: The IRS is looking for taxpayers who are due to recieve a combined $123.5 million in refund checks (107,831 return checks!) that were returned to the IRS by the U.S. Postal service due to mailling errors.

Here's what IRS Commissioner Doug Shulman has to say:

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

The undeliverable refund checks averaged at $1,148 this year, and some taxpayers are due more than one check. If you're owed money, don't hesitate to do everything possible to retrieve your funds!

The rate of undeliverable refunds increased by 16% this year, which lines up with the 15% rise in average refunds. This is all likely due to several changes in tax law, like the First-Time Homebuyer's Credit.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable. But if the refund check is returned to the IRS as undeliverable, the steps to retrieve your check are relatively simple.

Owed a Check? Here's what to do:

- Use the "Where's My Refund" tool on IRS.gov. this tool will enable you to check the status of your refunds. You'll be required to submit your social security number, filing status, and amount of the refund shown on your 2008 return. The tool will provide the status of your refund and may provide instructions on how to resolve any delivery problems.

- You can also access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.You'll be given instructions on how to update your billing address.

- The IRS encourages taxpayers to choose direct deposit when they file their returns because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

- The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds.

Stay up to date: When you move, keep the IRS informed. You don't want to miss out on $1,000 or more simply because you didn't notify the IRS when you changed your address.

IRS Tax Issues: New Tax Law Lets Small Business Owners Get a Tax Break.

2009-11-10T11:53:00.000-05:00

Even the Odds: It's hard to get ahead. Sometimes you need a side business. Most independent workers don't have just one business. Hairdressers also own nail salons, photographers own frame shops and journalists may offer resumé building services. The possibilities are endless. But you have to watch out. No matter how many businesses you operate, the IRS needs to know how much money you're making from each. You have to watch your back and make sure you report everything correctly.

Grouping Together: If it's easier, combine your businesses into one. Instead of having a separate nail and hair salon, have one salon that offers both or combine your web design and photography business. This keeps you from having to file two Schedule Cs.

The Catch: Your businesses need to be related. You cannot combine your dog walking business with your computer repair gig. But it makes sense to combine your essay writing and resume writing services. Be creative, but don't try to stretch your limits too far.

Hobby vs. Business: The IRS can classify your venture two ways. They may see one business as a “hobby,” which means less tax deductions for you! The IRS can classify your venture as a “hobby” if you lose money for 2 years consecutively or if you cannot provide proof that you are operating with business sense. If your business is classified as a hobby, you can only receive deductions up to the amount of money you've earned with the hobby.

Word of Caution: If you received tax deductions on your work tools for two years before your business was classified as a hobby, you'll owe that money back! And if you don't pay it back, you'll end up in debt with the IRS. And you may already know how that goes. You risk Tax Levies, Liens, and Seizures. So it's important to do your research and classify your businesses correctly.

Do Your Research Before You Start a Small Business

2009-11-09T10:01:00.000-05:00

I need to write the book on Small Business Tax Help already. The more cases I handle at the office, the more I realize that the vast majority of business owners don't have any idea how to run a business! They mess up in every way they can- and end up owing the IRS big time. Here's a few basic pointers.

Before You Start, Read Up Starting your own business can be a massive undertaking. Even if it's a side job. It's a drain on time (friends? what friends?), money (start-up hurts), and it's stressful to boot. But even if you combine all of those factors, you still don't get the amount of frustration the IRS brings to the table. The IRS makes things ridiculously hard for Small Business. Here's some things to read up on before you even consider taking the plunge:

-IRS Tax Information for Business: Straight from the source, and intimidating online handbook of rules and regulations.

-Business.gov: Find loans and grants, get business licenses and permits, register your business name, and even a discussion forum.

-Circular E: Thinking of hiring employees? Here's Circular E, the Employer's Tax Guide. Reading this entire guide in one sitting is recommended only for my most masochistic of readers.

Does all of this seem like "too much"? Run while you still can. Starting a business might not be for you.

Expect to Report Income The IRS wants you to report all income, no matter if it's your side job mowing lawns or a bigger 20 man landscaping operation. A lot of people think self-employment is their path to untaxed income. Think again.

Keep All Records We talk with dozens of people daily that don't have any files or bills. The IRS requires this information. Otherwise, how can you prove the deduction? You need to keep receipts, copies of bills, and invoices in a safe place.

Final Tip If you can afford it, hire a third party or an experienced staff accountant to handle your tax issues for you. This will free you up to do what's important, run your business.

Somebody's Watching You...and it's the IRS. Watch out for IRS Debt

2009-11-06T11:11:00.001-05:00

Ever have the feeling... that you're being watched? It could all be in your head. Or is it? Sorry to give you the bad news, but you actually are being watched. The IRS doesn't have spies out there peeking through your blinds. But they do watch what you claim as deductions very carefully.

Somebody's watching me! So is it time to panic if you already claimed false deductions on prior tax returns? That all depends on the time frame. The IRS can audit a tax return up to 6 years after it has been filed. So if you made false deductions in that period, maybe you should be a little wary.

What do I do? If you already made the big mistake of lying to the IRS, it's not too late. First, find all your old records. Gather anything you can use to prove your case to the IRS. The IRS loves documents. But if years have passed, it's going to be hard to find all of that old paperwork.

If worse comes to worse... So you can't hunt down those files from years ago? You can either say your prayers and hope the IRS doesn't levy your bank account and garnish your wages to make up for past mistakes, or you can consult with a Tax Professional that can give you advice about your specific situation.

Prevention is Key: Times are tough, and the IRS knows this. They know with sky high gas and food prices, people with families to support are desperate to save a buck. They know people are going to be claiming false deductions more than ever, and they have already officially announced that they are doubling their efforts to catch those who commit fraud. So don't get tempted! And keep all receipts and files that support all deductions you take.

Taxpayers Strike Back: Fight Back and Beat the IRS

2009-11-05T10:42:00.000-05:00

Finally Caught: You may have found the way to beat the system for a little while. But no one escapes Uncle Sam or his team of IRS Hitmen for long. The IRS has many weapons they use to make you pay. Know the enemy. Then when the IRS strikes, you can fight back.

Bank Robbery: One of the most dreaded methods the IRS uses to collect on taxes is the Bank Levy. The IRS locks you out of you own bank account. Then they seize everything you have in it. This may seem illegal, but it's not. You or your bank has no say in this matter, it's a legal weapon they use to collect the IRS debt.

- Fight Back: When a Bank Levy is issued, you have 21 days before the IRS seizes your funds for good. This is your window of opportunity to act fast and contact the IRS and negotiate a solution. But let me tell you from experience, I rarely see Bank Levies lifted. The IRS can practically taste that money and they don't want to let it go.

Credit Attack: Another way the IRS collects on back taxes is implementing a lien on your credit. This is the kiss of death for your credit. Forget getting a loan, buying a new car, opening a new credit card account, or even signing a lease with one of these bad boys looming over your credit report.

- Fight Back: If you can prove to the IRS that the levy is preventing you from paying off your debt, they will consider the levy. A good way to do this is by letting them know you want to get a bank loan to pay off your debt.

Goodbye, Paycheck! My favorite way to collect debt was issuing a Wage Levy. This is when the IRS contacts your employer and lets them know they will take a percentage of your paycheck. They can legally garnish up to 75% of your check. I liked the 75% Garnishment because it really grabbed the attention of the taxpayer. And the worst part, Wage Garnishment can go on forever if you don't set up a payment arrangement.

- Fight Back: There are two good ways to prevent the IRS from Levying your Wages. The first would require you to round up documents to prove you'll be living without basic needs if the IRS levies your wages. The second way is to come up with some kind of payment solution. As long as you pay the IRS monthly, they will lift the Garnishment.

It's not over yet... I've provided some ways you can fight back against the IRS and their weapons. But this is only the start of the battle. You ignored the debt, and now the IRS wants their money.

IRS Tax Issues: The Top 3 Most Requested IRS Forms and How They Save You Money

2009-11-04T10:16:00.002-05:00

Knowledge is Power it sounds corny, but it's true. Most people don't have a clue when it comes to IRS rules and regulations. And naturally, few people have knowledge of the countless forms and documents the IRS requires taxpayers to fill out. So get out your pen and take notes, the more you know about the IRS the better.

The Top 3 Forms: These are the top 3 most requested IRS Forms according to the IRS

Form W-9 Request for Taxpayer Identification Number and Certification
Form Purpose: Use this to retrieve your Taxpayer Identification Number (ITIN)

How it Saves You $$$: Failure to Furnish your correct ITIN to a requester can result in a $50 penalty.
If you provide a false ITIN number with no reasonable basis to back you up, you may receive a whopping $500 penalty! Misuse of ITINs or falsifying information can result in civil and criminal penalties.

Form W-4
Form Purpose: This form lets your employer withhold the correct Federal Income Tax from your pay.

How it Saves You $$$: Be honest with yourself. If your employer doesn't withhold your taxes, will you take the initiative and withhold the taxes from your income? Probably not. And if the IRS doesn't get their cut, you could end up with a massive debt. If you have not filled out a W-4 form yet, let your boss know you need one A.S.A.P!

Form 1040 U.S Individual Income Tax Return
Form Purpose: Use this form to report your annual income to the IRS, as well as your annual deductions.

How it Saves You $$$: You need Form 1040 to receive your tax returns and itemize deductions. If you do not turn in Form 1040 and/or Form 1040 A annually you will be fined and penalized. This is one of the most important IRS Forms.

Why it's important: The IRS has to handle thousands of taxpayer's issues annually. The IRS is not designed for “customer service,” they are not going to patiently handle your issue for you. That means it's your responsibility to request information and handle your account. Knowing what forms to request is a huge step in the right direction.

IRS Tax Lien- 3 Ways to Remove an IRS Tax Lien

2009-11-03T09:06:00.003-05:00

An IRS Tax Lien can have a devastating effect on your financial life. Your credit is ruined, and you assets are in constant danger of being seized the longer you wait to pay the IRS. So what should you do? There are three ways you may be able to remove your Tax Lien. No effort is guaranteed, but it doesn't hurt to try them.

1. Appeal the Lien Filing
The IRS has five business days after filing the lien to provide you with written notice. The written notice must include notice of the right to request a hearing within 30 days from the sixth day after the Lien filing. If you win the appeal, the lien will be withdrawn. However, the lien being filed on you will still appear on your credit report. Because of that, this method would not be ideal for those out to protect their credit.

2. Request Partial Discharge
You may own several assets that are encumbered by the tax lien. You can use one to pay off the IRS. If you want to do this ask for a discharge from the Tax Lien. The IRS will likely do this. You will need to send a detailed letter to the IRS. There is no preprinted form for you to fill out. IRS Publication 784, “Application for Subordination of Federal Tax Lien” lists all the information you will need to include in your letter.

3. What to do if the IRS Files a Tax Lien in Error
The IRS occasionally files a tax lien notice when you don't owe anything. Perhaps you paid your bill late, and the IRS neglected to update your account. If this happens, under the Taxpayer's Bill of Rights you are entitled to a “Certificate of Release”. The “Certificate of Release” will state that the Lien was filed in error. It will then be your job to mail or deliver photocopies of the release to the three credit bureaus- Experian, TransUnion and Equifax. This will minimize the damage to your credit rating caused by the IRS error.

4. Avoid Bankruptcy
Contrary to popular belief, filing Bankruptcy will not wipe out a Tax Lien. If your Tax Debts qualify for a discharge under any type of bankruptcy, the Lien will remain. If you owned any property going into bankruptcy, the property is still subject to a Tax Lien. The IRS could seize the property after your bankruptcy is over.

Be careful when you perform any of the above tasks to get the IRS to release your Lien. You risk having your Lien remain until the statute of limitations expires if you make even a small mistake. You also greatly increase your chances of having the Lien removed if you file your back taxes.

IRS Tax Debt- What Do IRS Notices Mean, And How Do I Respond

2009-11-02T08:52:00.000-05:00

Threatening Letters If you have a problem with the IRS, they automatically send you a notice. A common notice is “Notice of Tax Due and Demand for Payment”. When you pull something like that out of your mailbox, most people panic and then ignore the letter. Bad idea! If you follow the steps below, you can resolve the notice quickly.

- Read, Read, Read: It looks like I'm stating the obvious, but I'm not. Most of the people I called didn't even read the notices the IRS sent them. Sometimes the IRS Notice is simply asking for more information from you, or is letting you know there was a discrepancy on your tax return. All notices have a code containing “CP” and number. Research that code to find detailed information on the purpose of your specific notice.

- Call the IRS: The Notice will have a phone number for you to call, as well as the name of your IRS Agent. You can use this information to ask for an explanation of the notice and how you can resolve the problem. But I'll be honest with you. When I was an IRS Hit-Man I only wanted to discuss one thing, and that was how fast they could give me their money.

- Write Back: If you choose to mail a response to the IRS, it's important to use Certified Mail. The IRS get millions of pieces of mail a month. Not surprisingly some mail slips through the cracks and gets lost. Using certified mail with a return receipt requested will let you know that the IRS received your response.

Keep Copies: Be smart and keep copies of the original letter and your responses with the IRS for your records. Also make sure you keep copies of any postal receipts. This will be important if you end up in dispute with the IRS and they claim you didn't get back with them.

Eye of the Storm: So now you know what that letter means. But remember, making contact with the IRS is just the first step. If you owe the IRS, it won't be easy to find a solution. Do you homework, and do things right the first time.

Tax Defense Network Presents: The Tax Kids

2009-10-30T08:31:00.000-04:00

The official video for "The Tax Kids" is now online.

It's been fun to participate in this project. The Tax Kids is a light-hearted project that brings humor to serious issues like tax debt. We Developed this in hopes of spreading awareness of serious issues like Tax Debt, and perhaps make it easier for children to understand the issues their parents are going through.

Since it's Halloween, I thought I'd feature the Trick Or Treat feature again as well:

Have a Happy and Safe Halloween!

5 Basic Options for Resolving IRS Tax Debt

2009-10-29T09:16:00.001-04:00

Get the Facts: There's a lot of ludicrous ideas out there about Tax Debt. So you need to know the cold hard facts. Don't let unreliable people tell you that settling tax debt is “Easy” or that there's “tons” of ways to pay off the IRS. Because it's not true. Working with the IRS is hard. Filling out IRS paperwork is daunting. And there are only 5 real options for handling your IRS Debt.

1. Wait for Statues to Expire: Bad idea! The statue of limitations on your debt will not expire for 10 years. And sometimes, the statues are extended (like if you file for an “Offer in Compromise.”) And while your waiting for the time limit to expire the IRS can collect on your debt by force with Tax Liens, Levies, and seizures. Don't give them the opportunity to do this. It will not pay to ignore your debt.

2. Pay in Full: If there is any way you can actually pay in full, do it! Do not submit an “Offer in Compromise” if your have money in the bank to pay for your IRS Debt. Your IRS Hitman has access to your bank account. If they see you have the money to pay, they will tell you to pay in full.

3.Settle It: The IRS gives you the chance to submit an “Offer in Compromise.” You're are basically settling your debt for a lower amount. Very few people are actually accepted for this program. And barely anyone has their offer accepted for “Pennies on the Dollar.” But if you are in a truly desperate situation, you might want to see if an “Offer in Compromise” is an option for you.

4. Suspend Collections: If you are in a situation displaying true Financial Hardship, prove it. The IRS might stop the collections process for a limited amount of time so you can get your finances back in order. They will determine the amount of time based on your situation, and check up on you periodically to see if your situation has changed yet.

5. Pay Monthly: You can pay the IRS monthly. You have to enter into an “Installment Agreement” with the IRS to do this. The IRS will take a close look at all your finances and assets. If you're approved to pay monthly, they choose the amount you pay each month. Then you are locked into a binding contract, stating that you must pay a certain amount monthly. And defaulting can have harsh results.

Still Hope: Sorry if I'm making things seem hopeless. Yes, paying off your IRS Debt is hard. The IRS's system of ruthless Hitmen doesn't help the matter. But there are ways to get your debt taken care of. None of the options I have described are easy to do. But you have to do them if you don't want to remain in debt to the IRS forever.

IRS Tax Debt: How to Pay the IRS with Easy Monthly Payments

2009-10-28T09:10:00.000-04:00

Catch it Early: You usually file your taxes on time. But this year, you're scared to. You know this you owe the IRS, but this time, you can't pay it. So what should you do? Don't ignore your IRS Tax Debt. Find a solution to pay it off. The IRS actually offers a program that lets you pay your debt in monthly payments.

Paying Monthly: The IRS has a program that allows taxpayers to make simple monthly payments. It's called an “Installment Agreement.” It's a good option if you cannot pay your IRS Debt in full.

Installment Plan Criteria:
-You paid all your taxes for the past 5 years and on time, too
-You can provide documents to prove you can't pay your taxes in full on time
-You agree to pay the full amount owed in 3 years maximum
-You agree to comply with all tax laws during the plan
So you think you qualify? Next, is the hard part.

How To Apply:
-Fill out Form 9465 (You may be asked to fill out form 433-A as well)
-Include detailed evidence showing why you cannot pay your bills on time.
-If you are approved, pay the fee and then your first payment as soon as you get the IRS's letter

Pay on Time! If You don't, you'll be risking Tax Lien and Levies. And you won't be able to apply for an Installment Agreement for another 5 years if you mess up and don't pay.

Hurtles to Jump: The IRS wants their money as soon as possible. They don't want to give you an installment agreement. You will have to fight hard to get your Installment Agreement approved. If you are not accepted the first time, try again!

How to File for Innocent Spouse Relief

2009-10-27T08:20:00.000-04:00

You just received the IRS's dreaded “Notice of Intent to Levy,” but there's a big problem. This isn't your IRS Tax Debt! This is your spouse or ex spouse's problem. So what can you do when the IRS has its sights set on your bank account? Innocent Spouse Relief may solve your problems.

Innocent Spouse Relief 101: Most married couples file jointly to save money. But with the savings comes a big disadvantage. When taxpayers file jointly they are held liable for their spouse's taxes. So if your spouse underreports their income, you'll get the blame too! And if they can't pay, guess who gets the bill…you!
Where do I start?

To request Innocent Spouse Relief, file Form 8857, “Request for Innocent Spouse Relief”.

Will my ex spouse know if I Request Innocent Spouse Relief?
The IRS is requi
red by law to inform your ex or current spouse when you file for Innocent Spouse Relief. There are no exceptions, not even for victims of spousal abuse. But don't fret, your current address, employer, new name and other personal information will not be disclosed.

What else should I include with my form?

The IRS encourages you to file Form 8857 even if you don't have any documentation. But it's a good idea to provide all of the physical evidence you possibly can, they'll increase your odds of winning. If you have bookkeeping documents, sales receipts, or anything else that proves you were unaware of your spouse's debt, include it when you mail the form.

Will I still receive my Tax Returns while my request is being processed?
As long as you don't owe the IRS, you will receive your Tax Returns.

How long will it take for the IRS to get back to me?

The IRS will carefully review the forms. It could take them as long as four months to get back to you. If you hear no word from the IRS after four months, consider resubmitting or hiring a tax professional to help you with your case.

Denied: Many Innocent Spouse Relief claims are denied. So you must make sure you provide plenty of documentation to back up your case. Basically, you need to prove you didn't know anything about your spouse's debt. Because you file and sign the papers, you're automatically liable. If you were already denied relief and have new information to provide, you can resubmit your form with your new documents.

The IRS Hitman features in Tax Defense Network's "The Tax Kids"

2009-10-26T14:15:00.003-04:00

I hinted at a new project last week; now is the time to reveal it. I participated in a new video for "The Tax Kids" (www.thetaxkids.com) . The Tax Kids is intended to be a fun, light hearted approach spreading Tax Debt awareness. Take a load off and enjoy the fun video, but remember, if you ignore IRS issues you'll be in for a true horror story once they catch up with you.

The IRS Hitman Films another video with Tax Defense Network

2009-10-23T08:40:00.004-04:00

I'm ready for my close-up again... late last night we finished up production for another Tax Defense Network video. (Like my hat?) I finally got permission from Tax Defense Network to share some pictures and details.

We're always working hard behind the scenes thinking of ways to spread awareness of tax debt issues, and ultimately help more people in need. It's been hard for me to catch up, writing blog posts in the morning, participating in morning meetings, going through hundreds of e-mails, then filming at night. It's hard work, but it's rewarding.

In my past videos I've mostly earnestly discussed my decision to leave the IRS and join the Good Fight as the IRS Hitman. This time, I get to stretch my acting skills.

Expect more videos and updates in the near future. I'll share out latest video on the blog as soon as it's available.

IRS Tax Issues: Medical Deduction Myths to Avoid, Stay out of Trouble With the IRS

2009-10-22T09:26:00.002-04:00

Stop Right There: Don't make a claim unless you know the facts. There are plenty of rumors swirling around about what you can and cannot claim as medical deductions. But the IRS's official list in Publication 502 says otherwise. Watch out, don't fall for the myths and get into trouble.

You can include ALL of your insurance premiums in your medical deductions.
Wrong. The IRS actually has a list of insurance premiums that you cannot include as medical deductions. These include:

- Life insurance policies
- Policies providing payment for loss of earnings
- Policies for loss of life, limb, sight, etc
- Policies that pay you a guaranteed amount each if you are hospitalized for sickness or injury
- Health or long-term care insurance if you elected to pay these premiums with tax-free distributions
- The part of your car insurance premiums that provides medical insurance coverage for all persons injured in or by your car because the part of the premium for you, your spouse, and your dependents is not stated separately from the part of the premium for medical care for others

You can include your Weight-Loss Program in your medical deductions.
Wrong again! You can ONLY include a weight-loss program in your medical deductions if the program is vital and you have a serious medical illness. This includes issues like obesity and heart disease. But remember, even if you do qualify to use your weight-loss program as a deduction, you cannot include membership dues in a gym, health club, or spa as medical expenses. You can only include separate fees charged at the gym or health club for weight loss activities.

You Can Include Cosmetic Medical Procedures in your Medical Deductions.
No. This is almost never true. You cannot include procedures like teeth whitening, plastic surgery, or hair removal in your medical deductions. Some people think you can claim things because they may help your overall health, but you cannot claim ANYTHING that is better for your overall health. (Like Vitamins, Herbal Supplements, and Vacations!) However, if the cosmetic surgery is to help repair disfigurement from birth defects or injuries, you may be able to claim the procedure as a medical deduction.

Fair Warning: If you claim a medical deduction that is not considered to be appropriate, the IRS may label it as Tax Fraud. Tax Fraud is a crime that carries civil penalties and criminal charges. So don't try to get creative on your Tax Returns!