We learned recently at TaxMasters, Inc. (TAXS) that more tax audits are on the horizon. With the current tax gap weighing heavily on the IRS, agents are looking for revenue wherever they can find it. IRS audits are always a source of heartburn for the taxpayer being audited, but when a business gets audited, the potential for disaster threatens not just one person, but every person who depends on that business for income, products, and services. If your business is facing an audit, TaxMasters offers the tax audit help you need.

Random Employment Tax Audits Going Up 33%

According to reports in The Kiplinger Tax Letter, the IRS will increase the number of random employment tax audits 33 percent over the next three years. The IRS hopes this 33 percent increase in random employment tax audits will help them collect additional revenue and update their estimates of the tax gap. The first audits are scheduled to get under way in November.

What the IRS is Looking For

Reportedly, IRS agents will be looking for employers that are violating worker classification rules and that abuse the tax rules for executive compensation and employee fringe benefits. The IRS is also reported to be looking for S corporations that pay their owners meager or non-existent salaries, which allows a corporation to pass profits through to its shareholders as dividends to save on payroll taxes. In other words, if your company is engaged in issuing 1099s instead of W2s for fulltime employees, offering executive bonuses, providing cell phones to employees, or passing out high dividends, look out. Make sure you work with a qualified tax preparer to put together all the information you need to support your case. If you don’t have that information at hand, you may be in line for a serious IRS audit.

Finding Tax Audit Help

If you are one of the unfortunate companies to be selected for a random employment tax audit or any other IRS audit, you may need some help. TaxMasters has a team of audit professionals standing by ready to provide the top-notch tax audit help you will need to face an IRS audit. Understand that any time the IRS amends a return or sends you a change notice, that constitutes an audit. That means you have the right to challenge the IRS audit findings. If you have been hit with an unfair or inaccurate assessment because of an audit, you need to contact us today.

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.

October 15 Tax Problems

So you waited until the last minute and couldn’t get all your documentation in order on Monday or Tuesday. By the time Wednesday, April 15 arrived, you knew you were too late and weren’t going to meet the IRS income tax filing deadline. Odds are you filed an extension using IRS Form 4868. If you did that, pat yourself on the back. Too many taxpayers simply let the filing go and don’t look back until the IRS forces them to.

Do You Have Unfiled Tax Returns?

If you did not file your 2008 tax return and did not file an extension, you need to get your 2008 taxes filed as soon as possible. And if 2008 is yet another return you haven’t filed in a long line of unfiled tax returns, you need to contact Tax Masters today to file your returns and get back into compliance with the IRS. We may even be able to save you some money in the process.

October 15 Extension Deadline

If you filed your IRS tax extension in April for tax year 2008, don’t let October 15 sneak up on you. Think back to April. If you filed your extension in a panic, you likely don’t know exactly what you owe the IRS. If you owed them anything, it has been building interest as time has passed. Our advice at Tax Masters is to make your internal deadline of getting all your tax information together September 25. That gives you three weeks to complete your own return if you are a self preparer, or three weeks to finalize things with your tax preparer, make out the check to the IRS, and file by October 15. and if you can’t afford to pay what you owe, don’t let that stop you from filing. File your return and work out a payment plan for what you owe.

Failing to File Tax Returns is a Federal Crime

Failure to file a tax return is a federal crime. At Tax Masters we spend a good deal of our time helping people rebound after failing to file tax returns for several years. It can take quite a bit of effort to get someone back into compliance with the IRS, especially if their record keeping wasn’t the best.

Don’t let the October 15 IRS income tax extension deadline sneak up on you. You don’t want to be out of compliance with the IRS, pay all the interest on the money you owe, and pay the failure to file fees on all your old tax returns. It’s far easier and cheaper to stay ahead when it comes to filing taxes.

You made a good decision in filing your income tax extension in April. Now close the deal and do what you need to do to file your 2008 tax return by the extension deadline. If you have all your materials and tax documentation together and organized by September 25, that gives you three weeks to get your tax return filed by October 15.

Until you need us,

Patrick Cox Tax Masters

Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc., 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 tax relief teams in the tax representation business. Patrick Cox and Tax Masters are located in Houston, Texas.

IRS Notice CP 11 - Changes to Tax Return, Balance Due

The IRS sends notice CP 11 to inform you they made changes to your tax return that resulted in you owing more money to the government. In other words, they conducted an electronic audit and made changes to your tax return based on that audit. Most taxpayers who receive a CP 11 don’t realize they have been audited and that they may benefit from seeking tax audit help.

CP 11 instructs you that you should pay the tax liability reported in the body of the notice in full. Sometimes this notice includes additional penalties and interest that have accrued on the amount owed, and it may also include an installment agreement request form.

IRS Notice CP 11 is the Result of an Audit

Any time the IRS changes your income tax return, it is the result of an IRS audit. As such, you have the right to appeal the findings that triggered the change. One thing we know well at Tax Masters is that you should never assume that IRS changes to a return are correct. As the person responsible for paying your tax liability, it’s in your best interest to make sure the IRS hasn’t made a mistake.

CP 11 notices are typically generated after the IRS computers catch what they consider to be an issue or problem with your tax return in what is referred to as an electronic audit. In this type of audit, IRS systems detect an anomaly in your return, correct it automatically, and then generate the bill (CP 11). Very little, if any, human interaction is involved with this process. And as we all know, computer applications and scripts are only as good as the logic they are based on. It’s entirely possible that you have received a CP 11 in error or that the information in the notice is based on erroneous data or assumptions. 

We find an amazingly high error rate in favor of our clients with tax returns that have been automatically updated by IRS systems.

If you receive an IRS notice CP 11, contact us and let us talk through the details of your situation. It may be that you don’t owe what it is the IRS computers claim you owe.

Until you need us,

Patrick Cox Tax Masters

Types of IRS Tax Audits

An IRS audit can be one of the most trying experiences you will face. IRS auditors are notorious for looking until they find a problem they can use to extract more taxes from you. As I’ve stated before, we believe taxpayers should pay their fair share of taxes, but we also believe that you shouldn’t pay one dime more than your fair share. And while a taxpayer facing a field audit or an in-office audit is typically terrified, taxpayers who have had a correspondence audit typically don’t even understand that they’ve been audited. There are three types of IRS tax audits.

Correspondence Audit

The correspondence audit is the most common type of IRS tax audit. It might surprise you to know that most people who have been singled out for a correspondence audit don’t even know they’re being audited. The reason is that the IRS doesn’t come out and declare they are auditing you. Instead, they send a notice to you indicating that the IRS made a correction to your tax return. While a correspondence audit could technically be used to notify you that you owe less than you paid, it is most commonly used to inform you that you owe more and payment is due immediately. The IRS may also ask you to send in additional information to clarify something on your tax return. Even with a correspondence audit, it is usually a good idea to have a tax representative help you address the IRS in a way that won’t get you into trouble. Providing the wrong kind of information can lead to expansion of the audit into more areas or a more detailed investigation into items not initially targeted in the correspondence audit.

Field Audit

Among the types of IRS tax audits, the field audit is the least likely to involve individuals. Field audits are primarily used to audit businesses. The IRS sends an auditor, or a team of auditors, to a business to examine the financial books, documents, and transactions, generally to make sure the business is not short-changing the IRS or cooking their books. Generally in these circumstances, the IRS auditors will work with the corporate financial officer to go through the business’ income and expenses.

In-Office Audit

The in-office audit is the type of IRS tax audit most people think about when talking IRS audits. The IRS schedules an appointment for you to bring all your tax documentation to an IRS office location. At the IRS offices, you would then meet with an IRS auditor and substantiate your tax return with your supporting tax documentation. While it’s never a good idea to face an IRS tax audit on your own, if you are facing an in-house audit, you need to seek IRS audit help before responding to the IRS. The IRS auditors assume you have full and complete knowledge of the tax laws and regulations of this country. They also assume you have read and understood each of the thousands of publications issued by the IRS on various tax topics. Tax Masters understands that this is not what you do, but it is what we do.

IRS Audit Help

At Tax Masters, we supply more people and businesses with IRS audit help in one year than most CPA firms or accounting firms do in their entire professional life. Tax Masters has a great success record with all three types of IRS tax audits. Whether the IRS notifies you that you owe more than you reported on your tax return, shows up at your door asking to review your books, or schedules an in-office audit, the Tax Masters audit team has the experience and the latitude to help you resolve your IRS audit favorably. Don’t make the mistake of going through any type of IRS tax audit alone. Tax audit help is a simple click away.

Until you need us,

Patrick Cox Tax Masters

IRS Audit Help - Immediate IRS Tax Relief

–TaxMasters Patrick Cox

One of the aspects of IRS tax relief that often goes overlooked by some of the other firms is IRS audit help. When you face an IRS audit, it can be an extremely unnerving experience. Hiring a tax relief firm with a proven audit track record will give you the confidence you need to survive a tax audit.

TaxMasters Audit Help

The TaxMasters audit defense team is extremely effective at offering IRS audit help. The team has provided audit assistance to a growing number of clients over the years and has a fantastic IRS audit track record. The main reason the TaxMasters audit defense team is so effective is that we understand IRS auditors and the IRS audit process. We know the game and we know the tactics the IRS uses. TaxMasters ability to provide IRS audit help is unsurpassed in the industry.

If you are in need of IRS audit help, contact TaxMasters today for a free IRS audit consultation.

Why Hire TaxMasters?

Many IRS tax relief companies tend to focus too narrowly on filing an offer in compromise for every client that signs up with them. They can skimp on hiring truly qualified tax preparers by replicating and even automating their processes. The sum total effect of concentrating so hard on making the offer in compromise filing process the main focus is that these firms tend not to have personnel capable of performing even simple IRS audit defense.

At TaxMasters, we have an entire department devoted to IRS audit help and tax audit defense. It has been said that we process more IRS audits in a week than most tax CPAs do in their entire career. We understand how to limit the scope of an audit, how to organize and present information in a manner the IRS expects, and what aspects to focus on while minimizing the likelihood of the auditor finding any other cause for further audit.

Tax Audit Help Timeline

Tax audits take much less than time than most other tax issues to resolve. If notified by the IRS that you have been selected for an audit, either in person (desk audit), at your home or place of business (field audit), or if they notify you that you owe more than you reported (paper audit), you need tax audit help. In paper audits, the IRS can change the amount you owe and send you the bill without even giving you the opportunity to defend yourself. In these cases, TaxMasters can help with appealing the audit findings.

In all audit cases, walking into an audit without representation is like going to criminal trial without a lawyer. The IRS auditors spend their working hours figuring out how to get as much revenue from taxpayers as they can by law. If you don’t know tax law, the odds are stacked against you if you fail to enlist IRS audit help before contacting the IRS.

What To Do When Being Audited By The IRS

If you are facing an IRS tax audit, call us at TaxMasters today, before you respond to the IRS. We can help you get organized and will provide the IRS audit help to which you are entitled by law. We are here to represent you.

Until you need us,

Patrick Cox TaxMasters

Tax Liens

As tax problems go, one of the worst things the IRS can do is attach tax liens to your property. They can always garnish your wages and levy your bank accounts, but tax liens are a particularly paralyzing weapon in the IRS arsenal.

Many taxpayers with lingering issues don’t realize just how much trouble they are in until it is too late. They see notice after notice come through with ever-increasing amounts of money owed and escalated warnings. The problem is that reading an IRS notice is about as easy to the average taxpayer as reading tea leaves.

Final IRS Notices

If you receive a Final Notice of Intent to Levy and Notice of Your Right to a Hearing (CP 90) or a Final Notice before Levy on Social Security Benefits (CP 91), the IRS is about to take your money.

While this is a 30-day notice, you do not have 30 days to act. If you receive one of these final IRS notices, you need to call us immediately. Even if you call today and we get everything in place in the next week, it’s a possibility that the IRS systems will not update quickly enough to stop the tax liens, levies, and garnishments that are scheduled to take place 30 days from the day the final IRS notice was sent.

If you are receiving any IRS collection notices, do not wait to take action, the longer you wait the more expensive the solution becomes. If you do have a Final Notice of Intent it is not too late, but you must act today to preserve your rights. Act immediately and call TaxMasters now!

Consequences of Tax Liens

Tax liens carry many consequences, short-term and long-term. As soon as the IRS files a tax lien, all property registered in your name is flagged. You generally cannot refinance or sell a piece of property, even to pay off your tax debt, without going through lien subordination or coming to some sort of agreement with the IRS beforehand.

In addition to freezing your ability to sell property, a tax lien puts a big red flag on your credit report. Most finance companies will not lend to you if you have a tax lien. And those that will lend to you in this circumstance typically charge almost inconceivable amounts of interest.

The long-term effects of the IRS filing a tax lien tend not to be discussed much, but they are very real. First, there’s the cost it will take you to get back into compliance with the IRS. Cost of services at any reputable IRS tax relief firm goes up as soon as you have a tax lien in place. The reason is that it takes a great deal more work to bring a taxpayer back from the bottom of the IRS tax lien cliff than to stop them from falling off in the first place. While you are working to regain compliance, the tax debt grows because of penalties and interest. So you wind up spending your resources and time on efforts to regain compliance instead of actually paying off the debt. Even after you have regained compliance fully and have paid your tax debt in full, settled that debt, or worked out a payment plan with the IRS, your credit remains in shambles. In many ways a tax lien does more damage to your credit long-term than does bankruptcy. So everything you finance over the decade following the enforcement of a tax lien costs more due to high interest rates.

All the additional costs that come with tax liens amount to an increased tax on the non-compliant. The current IRS and financial systems are designed not only to punish you for your tax lien now, but to continue to punish you for at least the next ten years.

Avoiding Tax Liens

Avoiding tax liens should be your highest priority if you currently have a tax problem. The way to do that is to call us today and get started right away on fixing your tax problem before it leads to a tax lien. Do not wait until you receive a final IRS notice. We can still help you even if you already have a tax lien, but the odds of stopping the IRS from filing a tax lien plummets exponentially with each day you wait to call.

Contact us or call us today at (866) 694-4018.

Until you need us,

Patrick Cox TaxMasters

Economic ‘Crisis’

The glance I took at the headlines this morning was flat out depressing. Small Banks Ailing as Recession Mounts, Hedge Fund is Dissolving as It Faces 2nd Inquiry, Shake-Up at Shell, Quarterly Earnings Fall at Staples… these are just a few. There is some growing optimism out there, but it’s my perception that most people think we are in terrible economic shape. It’s clear that people are scared to spend right now, even though most are still making about what they were this time last year. Of course there’s those who have lost their jobs and we empathize with that situation. But most of us still have a job. So what’s the deal?

Gallery Furniture–What Recession?

There is a business here in Houston named Gallery Furniture run by an incredible retail business mind in Jim McIngvale, better known around town as Mattress Mac. I can’t recall where I saw the reference, but when asked about the impending recession several months back, McIngvalestated plainly that he couldn’t control others, but that he didn’t plan to participate in any recession or downturn. I like that kind of attitude. It happens to be the same attitude we have at Tax Masters.

If You Get Knocked Down, Stand Back Up

Last week the main warehouse for McIngvale’s furniture business burned. This was a 100,000 square foot facility full of furniture, mattresses, and electronics. Gone. We all watched andwaited to see how Mattress Mac would respond. Less than 48 hours after the incident, Gallery Furniture was running a new television ad, thanking people for their support and informing everyone that their store on the west side of Houston was open for business and they were carrying on their Memorial Day sale as planned. If that’s not resilience, I don’t know what is. Our hat’s off to Jim McIngvale and Gallery Furniture for refusing to go down. Jim is known to be a class act here in Houston. I have met him once or twice and wholeheartedly agree with that opinion of him.

It’s my assertion that it will take people like those at Gallery Furniture to get this country back on track. It’s going to take people who refuse to stay on the floor when knocked down.

Proposed Increases in IRS Enforcement Budget, People, and Resources

As the recession, real or perceived, tightens its grip on the common taxpayer in the United States, the IRS is going to more aggressively pursue every dime they think you might owe. As a matter of fact, if you have been following my posts, you’ve already read about Obama’s 800 and about the current administration’s push to quadruple the IRS enforcement budget over the next five years. The message is plain. Pay your taxes and play by the rules or the IRS is coming for you.

Solve Your Tax Problem Now Before It Grows

As I’ve stated before, now is not the time to have a tax problem. Some estimate that 20 percent of U.S. taxpayers have some sort of IRS tax problem. That’s one in five. Look around you. Think about your friends. One in five of them owes the IRS money or is facing an audit. Now is the time to fix these problems, before the IRS has more resources and a larger budget with which to pursue tax evaders. Don’t let simple mistakes become a crime. This is a simple choice. But it’s a choice you must make.

Tax Masters is Strong and Here to Help

As Mattress Mac stated concerning the economy and what it means for Gallery Furniture, we’re not participating in any recession at Tax Masters. We are strong and we are here to help taxpayers all over the country fix the problems they have with the IRS. If you have a tax problem, you really need to get this fixed sooner rather than later. Don’t let your tax debt grow into something you can’t possibly pay off. Those penalties and interest are working against you right now as you read this.

Call Tax Masters today at (866) 694-4018 and put yourself on the road to settling with the IRS right now. You’ve already procrastinated long enough. Tax debt does not go away unless you take the appropriate actions to make it go away. Call us. We can help.

Until you need us,

Patrick Cox Tax Masters

Tax Representation and Resolution from Tax Masters Patrick Cox

The recent commentary about tax law changes and tax law enforcement budget increases coming from the White House has many in big business stopping and taking note. The implications of changing how the IRS taxes multinational companies will mean a good deal of work for staff and contract accountants all across the nation. Doubling the budget for IRS enforcement activities in a single year and adding almost 800 new agents will invariably increase audits, levies, liens, garnishments, and yes, collected revenue. You probably saw that President Obama had several things to say about taxes and the IRS over the last two weeks. We were particularly struck by the following quote.

“If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens, and act accordingly. And to ensure that the IRS has the tools it needs to enforce our laws, we’re seeking to hire nearly 800 more IRS agents to detect and pursue American tax evaders…”

Guilty Until Proven Innocent? 

I had to do a double take when I saw this quote from the president’s remarks from the White House on May 4, although I will say that we have seen the IRS getting even tougher since the election and the White House messaging plays into that trend. The implication of an IRS that assumes guilt until the taxpayer proves innocence harkens back to the IRS feared by so many before RRA ‘98 was passed into law. Don’t get me wrong. Everyone should pay their taxes, even multinational conglomerates. However, the implication that these companies are defrauding the government of money seems odd, especially when it is the very rules put in place by current tax law that allow these multinational companies to establish systems that keep them from being double- or triple-taxed by multiple governments. Regardless of the merits of the proposed tax law changes, the fact is that many of these multinational companies will be very busy over the next year or so figuring out how to get around whatever language finds it way into the new laws. And when the 800 agents hired to chase these companies can get no traction, guess where they are going to turn their attention.

Focus on the Middle and Working Classes

Being in the tax resolution business, we know that IRS agents tend to go after low-hanging fruit first. In the world of tax evasion, back taxes, tax debt, and audits, it is generally far easier to allege and collect tax debt from those who cannot afford to hire tax help. This is in no way a judgment against the IRS, but rather an observation. When these new 800 agents get up to speed and realize how difficult it’s going to be to fight accounting staffs at multinational conglomerates, they’re going to need some easy wins to balance their case load. And we fear that they’ll turn to the middle class and working class tax offenders in short order.

Congress to IRS Commissioner–Shrink the Tax Gap

We are extremely concerned about how a growing deficit, unprecedented tax gap, and planned budgetary increases for IRS collections will effect our typical client and the common American. I had the fortune of speaking with a respected Senator this week who sat on the confirmation committee that eventually voted to confirm former IRS Commissioner Mark Everson. I mentioned to him that the days of a kinder, gentler IRS seem to have ended. The Senator agreed and shared with me that in the confirmation hearings, Everson had been told in no uncertain terms that it was his responsibility to enforce the law and that Congress expected him to figure out how to shrink the tax gap. That was in 2003. The six years since Everson’s appointment have been tumultuous for the IRS, but one thing is certain given the recent focus on enforcement–the IRS is ramping up to increase its ability to locate and collect additional tax revenue.

Tax Masters–A Step Ahead

That’s where Tax Masters comes in. We are here to help taxpayers who encounter IRS abuse and who cannot afford to pay the IRS what they owe. We are extremely successful at what we do because we know the law, pay attention to trends and changes in the IRS, and use what we know to keep our clients a step ahead of aggressive collections actions.

If You Have a Tax Problem, Tax Masters Can Help

My advice today is simple and direct. If you have a tax problem, now is not the time to sit back and wait for tomorrow. Given the president’s proposal of doubling the tax law enforcement budget in a single year and quadrupling funding for tax compliance to $2.1 billion over the next five years, it’s clear that this administration plans to fund the Congressional mandate to collect the tax and enforce tax law. Acting before the IRS hires more agents and implements new strategies for locating and collecting additional tax revenue can keep you out of more serious trouble. Compliance is the key. Contact us today and let us help you solve your tax problems before they escalate any further.

Until you need us,

Patrick Cox Tax Masters

2008 Tax Season Draws to a Close

During a time of year when most IRS tax firms enter a quiet period of recovery after the frenzied tax season, at Tax Masters our day continues like normal. Most of our tax representation work actually occurs after April 15th. If you have an IRS tax debt or have serious tax problems, we stand ready to help you.

If You Did Not File, Act Now to Resolve the Problem

The first group of callers we see at this time of year tends to be made up largely of taxpayers who did not file their tax return or an extension. Because it’s after April 15, there are penalties and interest that will be assessed if you did not meet the filing deadline, but you should act now to correct this mistake before it becomes a more serious problem. Because of the current financial situation, many taxpayers may not be able to pay what they owe in full. Don’t let that be an excuse for not filing. It’s not illegal to owe the IRS, but it is illegal to refuse to file.

File Your Past-Due Tax Returns Now

Filing past-due tax returns is not particularly difficult if you know what you are doing and have good IRS tax representation. And if there is a tax debt associated with an unfiled return, it becomes more critical that you seek help in making sure you complete the process effectively, taking advantage of all deductions you have coming your way.

If You Filed an Extension, You Still Owe the Money

Also remember that filing an extension does not mean you are excused from paying what you owe. Interest accrues and does not stop accruing until you pay your tax liability in full or reach a settlement if you cannot pay.

Avoid Future Tax Problems

We work hard at Tax Masters not just in solving immediate tax problems, but in helping taxpayers understand how to avoid actions that can lead to additional tax problems in the future.  Tax representation to many firms is just about processing the payment, performing the service, and sending the taxpayer on his or her way. At Tax Masters, we want to help our clients get out and stay out of trouble with the IRS. If you have an IRS tax problem, give us a call today and talk it over with us at (866) 694-4018.

Until you need us,

Patrick Cox Tax Masters

Tea Parties

As I hope everyone realizes, yesterday was tax day. It was also a day filled with civil demonstrations being called “tea parties” that took place all over the country. Some were larger than others, but the turn-out was greater than we expected it would be at Tax Masters. While we have been watching this grass roots movement from afar, we decided it was time to go ahead and comment on the situation. I want to clearly state that we don’t support or condemn this movement, but there are some things about some of the rhetoric being thrown around that concern us.

The Law is the Law

Civil demonstrations are incredibly important in a republic, especially when the press is able to cover such events and to make them known to a wider audience. The key concept in civil demonstration to us at Tax Masters is the first word in the phrase: civil.

Not only does “civil” imply courteous, but it also refers to following the rules established by law. In other words, while it is perfectly legal and in fact moral to demonstrate for or against something you believe, you must still follow all current laws in order to avoid being labeled a criminal. It is incredibly important that you not use the fervor and fanfare of these tea party demonstrations as an excuse to not pay income tax and to not file tax returns. While demonstration is a great method for delivering a message to those who have the power to change the law, it is not a method by which you should disobey existing law.

A Warning About Tax Protesters

There are many issues being cited as relevant at the tea party demonstrations, including misuse of tax dollars, deficit spending, irresponsible use of tax dollars to bail out unworthy entities, and increased federal control over certain state-run programs like unemployment. While we have no first-hand knowledge of tax protesters joining the ranks at the tea parties, we have no doubts that this contingent will attempt to influence this movement as much as they can.

Our advice to the tea parties is to keep the tax protesters at arm’s length. They can be very convincing if you don’t have all the facts and they are capable of quickly dismantling the genuine spirit with which the tea parties have demonstrated. For those who have not dealt with tax protesters in the past, the most common argument they use is that the Sixteenth Amendment was not properly ratified, or that the state of Ohio was not actually an official state at the time of ratification. This argument is simply not true and has been repeatedly challenged and upheld in United States courts of law. At a time when Stuart Varney of Fox News (www.foxnews.com) is reporting a twenty-five percent collections shortfall at the IRS so far for the 2008 tax year, being affiliated with tax protesters might not be a great move. Also be aware that these protesters advance their agenda based in large part on paranoia. This may or may not be something tea party organizers can control, but they need to be aware that the tax protest crowd has a past and a reputation.

Tax Representation for Those In Need of It

We suspect that most of the people at these tea parties are law abiding people who are a bit upset about how much they are paying in taxes and about how that money is being spent. However, we’ve been in this business long enough to know that people can make innocent mistakes that get them into trouble with the IRS very quickly. One such mistake we are seeing more of is people taking money out of their retirement accounts before they are of retirement age. This can lead to significant tax debt if the financial institution doesn’t withhold the tax and early withdrawal penalties. For those who are having problems paying their taxes, we can help at Tax Masters. We offer comprehensive tax representation services, from audit representation to settling outstanding tax debt, to suspending levies, liens, and wage garnishment. If you are having trouble with the IRS, contact us today. We can help you solve your tax problem.

A Word to the Tax Protesters

Okay, here we go. I appreciate your frustration at paying taxes, but the law of the land demands that you file yearly tax returns and pay income tax to the United States government. Plainly stated, the IRS is a legal division of the United States Department of Treasury and has the constitutional duty to collect federal income tax from the citizens of the United States. The Sixteenth Amendment argument has survived all these years because proponents mistakenly believe that the courts have refused to address the issue.

Per information put out by the IRS itself (www.irs.gov), the courts have consistently upheld the constitutionality of the federal income tax. Just three years after the Sixteenth Amendment was ratified in 1913 by forty states (including Ohio), the Supreme Court upheld the constitutionality of the income tax laws that were based on the ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916).

A surge of cases were brought in the 1980’s, all set on debunking the Sixteenth Amendment. In Knoblauch v. Commissioner, 749 F.2d 200, 201 (5th Cir. 1984) cert. denied, 474 U.S. 830 (1986), the court admonished the case as having no merit whatsoever and fined Knoblauch for bringing such a frivolous appeal before the court, stating that “Every court that has considered this argument has rejected it.”

In United States v. Stahl, 792 F.22d 1438, 1441 (9th Cir. 1986), cert. denied, 479 U.S. 1036 (1987), the court upheld Stahl’s conviction for not filing returns and for making a false statement. The court clearly declared that “the Secretary of State’s certification under authority of Congress that the Sixteenth Amendment has been ratified by the requisite number of states and has become part of the Constitution is conclusive upon the courts.”

In Miller v. United States, 868 F.2d 236, 241 (7th Cir. 1989) (per curiam), the court sanctioned the plaintiffs for having advanced a “patently frivolous” position. The court stated that “We find it hard to understand why the long and unbroken line of cases upholding the constitutionality of the Sixteenth Amendment… and those specifically rejecting the argument advanced in The Law That Never Was, have not persuaded Miller and his compatriots to seek a more effective forum for airing their attack on the federal income tax structure.”

The Tax Masters Conclusion

At Tax Masters, we believe it is our duty and privilege to pay our fair share of income tax to the government of the United States of America. Our role as a tax representative and tax resolution firm is based solely on our ability to help taxpayers regain compliance, settle outstanding tax debt, avoid unnecessary interest and penalties, and get back in the good graces of the IRS.

We stand ready to assist any US taxpayer who is in need of our services. To the tea party demonstrators and organizers, we stand behind your right to demonstrate, but we strongly encourage you not to use this movement as an excuse to avoid filing and paying your federal income tax. Running afoul of the IRS at a time of shortfall is tantamount to running headfirst into a brick wall. You’ll probably survive, but it sure is going to hurt.

Until you need us,

Patrick Cox Tax Masters