First Time Home Buyer Tax Credit Extension

Good news- New legislation to extend the Homebuyer Tax Credit though April 2010 was approved, along with expansions that could provide up to $6,500 to pre-existing homeowners.

"We're looking at this as a very positive thing that will continue to spur sales," said Al Suguitan, president and chief operating officer of the Greater Gateway Association of Realtors. "I just returned from the convention for the National Association of Realtors, and people need to know that there will probably not be an extension beyond this date."

The Official overview on the First Time Home Buyer credit: For those who need it, here's an overview of the First time Home Buyer Credit.

- Applies only to homes used as a taxpayer's principal residence.
- Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
- Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

How much? The credit is 10% of the purchase price of the home for a maximum amount of $8,000 for 2009 ($7,500 for 2008).

You don't have to be a "Property Virgin"- For the purpose of this legislation, a "First Time Home Buyer" is someone who hasn't owned a principal residence for three years before buying a house this year.

I'm interested, Sign me up! Claim the credit with IRS Form 5405 and file it with your 2008 or 2009 federal income tax return.

The Catch:

- If you income exceeds the phase-out range. $95,000 or $170,000 filing jointly.
- You buy the home from a close relative (spouse, parent, grandparent, child, grandchild)
- You're a non resident alien
- You sell your home before the year ends
- You are (or were) eligible for the District of Columbia first-time home buyer credit for any taxable year.
- You owned a home any time during the three years prior to purchasing the new home

Remember you are not required to apply for this credit if you purchase a new home.

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

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.


Myth #1:  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.

Myth #2:  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.

Myth #3:  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.

Myth #4:  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.

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

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

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

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 you put off dealing with your tax debt 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. During this time, you need to get into a resolution as quickly as possible. Otherwise, you may wind up in even worse trouble.

• 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

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

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

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

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

Other Installment Agreements

There are many kinds of Installment Agreements. Some require financial disclosure and some do not. If you owe more than $10,000, the IRS will attempt to pressure you into an unaffordable payment plan. Defaulting on a payment plan can lead to pretty serious circumstances. This is why it is best to talk to a tax debt professional to make sure your payment plan works best for your situation.

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

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

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?

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.

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

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

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

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

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

An IRS Tax Lien can have a devastating effect on your financial life. Your credit is ruined, and your 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 only way you can win an appeal against a lien is if they placed it on you before you were ever notified of the tax debt. If the IRS sent a letter stating that you owed more than $5,000 at any point before the lien was placed, then you don't stand a chance of appealing it. Also, remember, just because you never received a letter doesn't mean that they didn't send it. The IRS is notorious for having incorrect mailing addresses.

2. Request Partial Discharge
A tax lien uses everything you own and will own basically collateral on your tax debt. If you want to take out a mortgage on or sell your primary residence to pay off your tax debt, you can request that the lien be discharged from this property temporarily. 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. Pay Off Your Tax Debt
This is the surest way to rid yourself of a lien. If you cannot pay it all in one lump sum, look into an installment agreement. This will help you eventually rid yourself of the tax lien. As an added bonus it will help you demonstrate your credit worthiness to lenders.

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

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. 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. You will have to fight to get the information you need, without giving away what you can't afford to the IRS.

- 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.