Professional Tax Help from an Ex-IRS Revenue Officer with over 30 years experience. I am an Enrolled Agent licensed to practice before IRS and an Accredited Tax Advisor. I have worked thousands of cases in my career and resolved millions in tax debt on both sides of the equation. I am now very proud to be affiliated with Guardian Tax Service and Brett Kerr. Guardian has been in business over 20 years.
I can help you in an IRS Audit, with an IRS Collection problem on past due taxes, or filing back tax returns. I work out payment plans, make penalty abatement requests, and for those who qualify; get accounts placed in temporary hardship or settle with an Offer-in-Compromise. I get your taxes filed and if you don't have the W2 or income info, I get it from IRS.
Is IRS threatening to levy your wages or bank account? Call me! If I can't help you, I will tell you straight-up. I can't guarantee an outcome, but I can promise that I will be honest with you.
Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case. There are statutory time limits on the ability of the IRS to examine and collect taxes. Taxes do expire at some point and in some cases IRS does not get the money they were legally entitled to collect.
Basically, IRS has 10 years from the date they send out their first bill to collect the tax. The 10 year rule does not apply to the states. Some, like California have no statute of limitations and the state tax collector can indeed hound you forever. The federal tax collector must get the cash before the clock runs out.
For tax assessments made after November 5, 1990, the IRS cannot collect the tax after 10 years from the date of the original assessment absent special circumstances. Special circumstances that may extend the statute are: a bankruptcy not completed or wherein the tax is not discharged; filing an Offer-in-Compromise; or signing a Form 900 Waiver allowing the United States additional time to collect the tax. Also, it is possible for the government to sue to reduce the tax claim to judgment before the 10 years expires.
If you never file a tax return, there is no statute of limitations on IRS requiring you to file, but as a matter of policy, IRS generally only requires non-filers to file the last 6-7 years. If IRS files for you by doing a Substitute-for-Return (SFR), they have 10 years from the date they file the SFR to collect from you. If a Federal Tax Lien is on file against you, it expires and becomes void if the underlying statute expires.
You can find out when the statute expires on your tax bill by requesting a Record of Accounts (ROA) from IRS for each tax year you owe. If you can’t afford to pay the tax, your account might be eligible to be put in a “temporary hardship” status. It may be possible to “ride out” the statute in hardship if you qualify. An impending statute might also be a beneficial factor in an Offer-in-Compromise.
If you have a refund coming to you, you only have 3 years from the due date to collect your refund. If you file 3 or more years after the due date, the refund is lost. In some cases you can persue a refund beyond the three years. If you full-pay the tax, you can file a claim for refund within 2 years of the payment. If your claim relates to a bad debt or worthless security, you have 7 years to make a claim.
The flipside to the 3 year refund rule is that in most cases IRS only has 3 years to examine a filed return by audit. The tax code is complicated and there are exceptions to these rules. If you have committed fraud or tax evasion, there is no statute for audit. There is also a 6 year rule for audit in cases of “substantial omission” of 25% or more in income. But for most folks, the three year statute will apply on audits.
Often people fall on hard times and stop paying on credit cards. After a while the account may go to an outside debt collector who might offer a settlement of the debt for 30-40% of the original sum. Once this is paid, the debtor often thinks the matter is closed, but it is not! It is very likely that the creditor will issue a 1099-C. This is a notice to IRS of the forgiven debt. If the debtor does not address this on his return he may get an IRS bill a year or two later with penalties and interest.
A foreclosure on a home may also result in a 1099-C from the mortgage lender if the property is sold for less than the amount of the loan. In this instance, a person loses their home and may also face a tax bill. Usually, the bill comes many months after the tax return was filed as a result of an IRS document matching program. This "under-reporter" notice brings grief to the taxpayer.
The key issue is whether or not the debtor was insolvent. If they were insolvent, it may not be taxable depending on the circumstances. There is an "Insolvency exclusion." You are insolvent when, and to the extent, your liabilities exceed the fair market value of your assets. So it is possible none of your forgiven debt is taxable or it is possible that all or only a portion of it is counted as income.
You may not have any taxable income from the 1099C, but you must account for it on your return. The issue is whether or not you were solvent at the time of the debt cancellation. You only owe tax on the forgiven debt to the extent you were solvent. For instance, if the forgiven debt was $10,000 but you are only worth $5,000; you would only be liable for income tax on that amount. A home foreclosure is complicated and you may have other legal arguments besides insolvency.
There are five situations where a cancelled debt does not have to be reported as income:
Bankruptcy – the debt was already discharged through a bankruptcy proceeding.
Insolvency – your total debts exceed your total assets at the time your debt was settled or deemed non-collectable.
Indebtedness is due to a qualified farm expense.
Indebtedness is due to certain real property business losses.
Discharge of your debt was treated as a gift (You owed Mom $10K and she said "Don't worry honey, consider it a gift").
If you are insolvent you need to explain this to the IRS on your tax return. You can fill out IRS Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness or attach a detailed letter to your tax return explaining the calculation of your total debts and assets.
Do not ignore a 1099-C! Failure to address the 1099C will result in a tax assessment by the IRS for any amount over $600 plus penalty and interest. This will likely occur 12-18 months after you file when IRS matches up the info reported to them with what is on your tax return. Have a tax professional do your return and they can help you determine how much of the 1099-C is taxable.
If you get a letter from IRS on a 1099-C you left off your return, get help ASAP.
Divorce is something no one hopes will happen to them when they get married. Unfortunately, almost half of all marriages do end in divorce. Since few people have pre-nuptial agreements, most divorces involve bitter tangles over children, money and assets. When it comes to the tax and financial implications of divorce, an attorney is not the only one you should rely on for advice. I have found ten common mistakes people make in the divorce process. A tax or financial pro can help you avoid them.