Taxpayers Fear the IRS–Nina Olson Interview on ABC News

As usual, ABC News missed the mark in their interview of Nina Olson, the National Taxpayer Advocate with the IRS. ABC had the opportunity to speak to the National Taxpayer Advocate about tax problems and chose to air more information about the symptom of tax disease (tax debt) than about the problem itself (IRS compliance). The simple fact remains that most tax problems begin and end with tax compliance issues, like failing to file tax returns, failing to make quarterly estimated tax payments on time, or failing to make payroll tax payments when they are due. The vast majority of people who come to Tax Masters with tax problems have tax compliance issues. They may want to settle their tax debt, and invariably everyone with a tax debt wants to find some way out of their situation, but that settlement is not possible until the taxpayer files all their delinquent tax returns and makes any currently due quarterly or payroll tax payments.

While ABC News focused on the debt issue, they did not include any content from the Nina Olson interview addressing how to regain compliance and the importance of doing so.

At Tax Masters, we have been asking for years, the right questions. This is direct content from Patrick Cox, Tax Masters’ CEO and founder. ”Are you being audited? Have you not filed tax returns for years? Has the IRS come to your home or place of business? The IRS will relentlessly pursue you for unpaid taxes. TaxMasters can get between you and the IRS. We’ll make sure they treat you fairly and treat you with respect.”

ABC News chose to focus on “pennies on the dollar” tax settlements and, in doing so, failed the American taxpayer dramatically. The focus needs to be on compliance. If, after a taxpayer is back in compliance with the IRS and still owes a tax debt, he or she can often afford an IRS payment plan. If the taxpayer cannot afford to pay the IRS, cannot afford a payment plan, and has no assets, there are other collections alternatives like partial payment installment agreements, currently uncollectible status, and the holy grail of tax relief, the offer in compromise.

ABC News failed to focus on the core issue of tax woes. Instead of discussing the issue, tax compiance, they chose to concentrate on the symptom, which is tax debt. Shame on you, ABC. You should have listened.

Transcript of ABC News Interview of Nina Olson

ABC News: Can I trust the IRS to work with me on my tax problem?

Nina Olson, National Taxpayer Advocate: Taxpayers fear the IRS and there’s a reason for that. The IRS is the most powerful creditor in the United States. We have awesome collection powers. And so there’s a basis for that fear. But that fear can be exploited so that taxpayers aren’t even willing or aren’t comfortable doing something that could protect themselves; just picking up the phone and talking to the IRS and walking through the problem, or even reaching out to my organization, the Taxpayer Advocate Service if they’re really having an economic hardship. We can help you and we can get collection activity stopped while we try to solve the problem.

ABC News: Is it possible to settle my IRS debt “pennies on the dollar?”

Nina Olson, National Taxpayer Advocate: Actually it can happen that because of your ability to pay. You know, if you have such reduced ability to pay, you may end up paying what could be pennies on the dollar of what you owe to the IRS. But it’s not an easy thing and you have to show the government, you have to show the IRS, that they are not going to be able to get any more money out of you than pennies on the dollar. And if that’s the truth, then you can settle with the IRS for that amount. But to say that you’d be able to do that routinely is just not true.

ABC News: How does the IRS determine whether I qualify to settle my debt for less than I owe?

Nina Olson, National Taxpayer Advocate: What the IRS does is it looks not only at your income and your expenses, but it looks at all your assets. You know, what is your net equity in assets? And so we’re getting a whole complete financial picture as well as mitigating circumstances like illnesses or job loss. But, you’re really looking at the financial picture and then deciding what is that person’s ability to pay?

ABC News: If I want to hire someone to help me with getting a collection hold, who should it be?

Nina Olson, National Taxpayer Advocate: Someone at the company who is qualified to practice before the IRS. It has to be an attorney, a CPA, or what’s called an Enrolled Agent, someone who’s taken a test to practice before the IRS. That person has to call on your behalf and they have to let the IRS know that they are there, that they have been hired to represent you. And then they can talk to the IRS about getting a collection hold. Now you too, a taxpayer, can call the IRS and ask for a collection hold and, you know until they can work out some collection alternatives like an installment agreement or an offer in compromise. A lot of this the taxpayer can do him or herself. But a lot of taxpayers are frightened of doing that themselves.

ABC News Interview of Nina Olson, National Taxpayer Advocate

ABC News Tax Masters – Taxpayers Fear the IRS – Nina Olson, National Taxpayer Advocate

Wesley Snipes Ordered to Prison for 3 Years for Failing to File as Many Tax Returns

Wesley Snipes–star of the “Blade” trilogy, Spike Lee’s “Jungle Fever,” and the cult classic “To Wong Foo Thanks for Everything, Love Julie Newmar”–was ordered today to begin serving a three year sentence by US District Judge William Terrell Hodges in Ocala, Florida. Snipes was convicted on February 1, 2008 of three counts of willfully failing to file income tax returns for tax years 1999, 2000, and 2001, and was sentenced to three years imprisonment on May 1, 2008. The sentence amounts to one year of prison for every year Snipes failed to file a tax return. Snipes appealed the conviction and managed to stay out of prison until today.

We understand the seriousness of having unfiled tax returns, particularly if the IRS believes a taxpayer has failed to file willingly. The government can and will, as illustrated in the Snipes case, send the offender to jail. It is our belief that Wesley Snipes acted on bad advice from others who thought they could get around the US taxing system and the IRS. This serves as yet another example of how most tax avoidance schemes end–with convictions, fines, and sentencing. We have repeatedly encouraged delinquent taxpayers to file unfiled tax returns to regain compliance and we will continue to do so.

We have watched the Wesley Snipes trial, sentencing, and appeals with a great deal of interest. While we understand the law must be carried out, we can’t help but empathize with Snipes’ position, which is not so dissimilar from that of many taxpayers who hire us. The lesson? Sometimes your mistakes can land you in prison.

We sincerely hope the best for Wesley Snipes. Admittedly, we hope he is perceived by the prison population as Blade while serving his sentence and not as Noxeema Jackson. Either way, we do not envy his position.

Blade and Noxeema--Characters of Wesley Snipes

If you have unfiled tax returns, get them filed now. The Snipes case serves as a reminder to all taxpayers that the IRS can and will seek imprisonment for delinquent filers. If you need help filing your past-due tax returns, contact us today. We can help.

About Tax Masters

Houston based Tax Masters has served tens of thousands of clients and had incredible success with settling federal tax debt, defending clients in audit, setting up monthly IRS payment plans, and filing past-due tax returns.

Sole Proprietors Watch Out–Your Return May be Assigned to a Revenue Agent

Our sources are reporting that Treasury inspectors have recently lambasted IRS agents for not effectively finding all the unpaid taxes of sole proprietors. The Treasury inspectors completed a study of correspondence examinations on 2007 tax returns only to find that IRS examiners missed more than $16 million in unpaid taxes on sole proprietors in their limited sample.

It seems the failures lie in the correspondence examination process. In a face-to-face audits, the IRS process typically uncovers unfiled tax returns and unreported income. But with correspondence examinations, auditors failed to uncover these basic facts. As logic dictates, adding new steps to an already slow correspondence examination process will not speed up revenue collection for the IRS in a time when the tax gap continues to grow and the Treasury faces incredible pressure to generate additional revenue.

Face-to-Face Audits to Increase for Sole Proprietors

The IRS solution will reportedly be to adjust its selections procedures for auditing tax returns. This adjustment will call for tax returns from sole proprietors with unfiled tax returns or suspected unreported income to go directly to IRS Revenue Agents instead of going through the automated correspondence examination process.

In other words, if you are a sole proprietor with unfiled tax returns or unreported income, watch out. When Revenue Agents call, they are looking for what you have done wrong and for what they hope you are hiding. It is generally in your best interest to demand that a Revenue Agent speak to your tax representative before you say something you cannot take back. Talking to Revenue Agents can have devastating consequences to your personal finances and on your business.

At Tax Masters, we handle more audits in a day than most CPAs handle in a career. Do not wait until you are contacted by a Revenue Agent to act, you need to get into compliance before the IRS sends in the Agents. It is far less expensive to solve the problem before it is a crisis. If you are contacted by a Revenue Agent, we suggest you call us immediately. Speaking to them will likely make your problem much worse. Refusing to speak to them will make them quite mad, but it is your best option at that point. Be respectful, but firm and inform them you intend to hire a representative and you wish them to speak with your representative. As soon as you close the door or hang up the phone, call us at 1-800-581-0456 to discuss your tax problem and to hire the audit defense representation you deserve. Don’t wait for an appointment, call us today.

Protect Your Business–Hire Tax Masters for Audit Defense

An audit is serious and your business may depend on hiring the right audit defense. Choose wisely. Choose Tax Masters.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation firms in the IRS tax relief industry. Patrick Cox and Tax Masters are located in Houston, Texas and the company is publicly traded under the ticker symbol TAXS.

Outcomes of Not Paying Taxes

As most of us know, the job of collecting taxes in the US falls to a tax collecting agency called the IRS, or the Internal Revenue Service. Paying taxes facilitates the essential services the government provides that keep our lives running smoothly (infrastructure, defense, government programs, etc.).

There are times when taxpayers may, because of choices or circumstances, not be able to pay their taxes at the time of filing. In these situations, TaxMasters encourages taxpayers to contact the IRS and set up a simple payment plan if the tax debt is relatively small. If you do not want to deal with the IRS yourself, TaxMasters will be happy to set up and negotiate a payment plan for you. Whatever you do, do not ignore your tax debt or act as if it does not exist. Not paying taxes is bad enough, but not paying taxes and going silent may get you into a world of trouble.

If you choose not to pay your taxes, the IRS will eventually send you a notice informing you that you have a tax debt which has to be paid immediately. If you fail to comply with the notice, it could result in the IRS adding even more penalties and interest than they already have. And trust me when I tell you that you do not want an IRS tax collector hot on your trail.

If you do not respond to the IRS notices you receive, the IRS will eventually send you a final notice of intent to levy, and a notice of your right to a hearing. Keep in mind that interest and penalties have been constantly accruing as you have sat back and chosen not to act. The IRS has the legal right to levy your bank accounts, garnish your wages or social security check, and place liens on your property to “encourage” you to pay your tax debt. This intent to levy notice has a 30 day compliance period. After the 30 days are over, it will be incredibly difficult to salvage your financial status. The IRS typically does not provide you any leniency if you have reached this point in the collections process, and will begin aggressive collections activity.

If you have received a final notice of intent to levy, you need to get in touch with a tax representative immediately. Time is of the essence and it is most definitely not on your side. If you are in this position, the IRS is about to shake what little is left of your financial wellbeing.

There is a great deal of anecdotal evidence claiming the IRS is known for withholding facts, misleading people and setting them up for payments they cannot afford. Of course, this is a he-said, she-said argument. And what the IRS believes you can afford and what you believe you can afford often do not align. The result of not paying taxes can bring a heavy burden to your life. Rather than facing the IRS alone with so much at stake, it is generally best to take a good tax representative along with you to hammer out the negotiations. Paying taxes is not something any of us like to do, but an experienced tax representative with a strong tax preparation team can do a good job of preparing your past tax returns, hopefully finding ways to reduce your liabilities. IRS tax relief is not always about settling tax debt. For many TaxMasters clients, it’s about moving back into the world of legality and compliance. Any savings are icing on the cake. But the real goal of anyone with IRS tax problems needs to first be compliance. 

One last point. It is not illegal to owe the IRS money. So while they may come after your money and assets in an attempt to collect revenue, you are not breaking the law by not being able to pay.

It is illegal to not file an IRS tax return every year. So file those returns no matter whether you can pay or not. Intentionally not filing tax returns is an illegal act that can be prosecuted. Not paying taxes is serious, but tax evasion is in a totally different league.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation teams in the IRS tax relief industry. Patrick Cox and Tax Masters are located in Houston, Texas and the company is publicly traded under the ticker symbol TAXS.

Have a Delinquent Tax Return… or Two… or Three?

Delinquent tax returns can mean big trouble for US taxpayers. With the current administration calling for more revenue officers and the IRS ramping up audits and looking to trim the tax gap, taxpayers who have not filed past-due tax returns are at serious risk. If you or someone you know did not file a 2008 tax return, you need to take action now and file that delinquent return before the IRS contacts you. The penalties and interest the IRS assess can increase if they have to bring a delinquent tax return to your attention. While the IRS trusts taxpayers to file their returns every year, they will also pursue the noncompliant tirelessly and punish them by making them pay additional moneys in interest and penalties.

Delinquent Tax Returns – A Spiraling Tax Problem

Especially in a down economy, when good people simply don’t have the money to pay the tax they owe, neglecting to file a tax return can be a costly mistake. For those who have not filed a return for a given tax year, it becomes easier to fail to file a second year and even a third, particularly if the IRS seems not to notice. Do not be fooled. The IRS can wait a surprisingly long time before notifying a taxpayer that they did not receive a return. And often this notice is accompanied by a bill that the IRS assesses based on what they think you owe for multiple years with penalties and interest tacked on.

If you have even one delinquent tax return, you need to file it tomorrow. And if you have several, you need take action to file today if the IRS has not yet contacted you. And if the IRS has already sent you a notice with a bill, it means they have already filed a substitute return for you and want their money. You need to contact us today so we can help you file your delinquent tax returns based on your actual income and take into account all deductions you have coming. When the IRS files a substitute return on your behalf, they use estimates for your income based on various facts they know about your earning history and do not allow for any non-standard deductions. We’ve stated this numerous times before–The job of the IRS is to collect revenue for the US government. Allowing the IRS to file a tax return for you is like handing your wallet to a stranger and trusting him to take only what he needs. It is imperative that you file all delinquent tax returns to make sure you pay the IRS only what you owe.

If you have delinquent tax returns or need IRS tax relief, call us today. Our tax consultants will diagnose your tax problem and build a customized plan for solving your tax problems. Do not walk into 2010 without a plan in place to resolve your tax issues.

Procrastination costs money when it comes to the IRS. Call us now.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax relief teams in the tax representation business. Patrick Cox and Tax Masters are located in Houston, Texas.