Bankrupty and Tax Debt: Your Top Secret Guide to Cracking the IRS Code

When you owe back taxes it feels like there's no hope of paying the IRS back. Don't fret, use this top secret guide to crack the IRS code and get out from under the force of the most powerful collection agency in the world!


Top 3 Secrets for Discharging Tax Debt with Bankruptcy

1. The 3 Year Rule: If your debt is less than 3 years old it cannot be discharged through bankruptcy.

2. 100% Compliance, or Else: You must be caught up on ALL tax filings in order to discharge a tax         debt through bankruptcy. Additionally, if the IRS had to file SFRs (Substitute for Returns) you will not be able to discharge your debt through bankruptcy.

3. The Magic Number: Your Tax Returns must be filed and accessed more than 24 months prior to filing for bankruptcy. This means the returns were filed AND processed and you were billed for tax debt 24 months before applying for bankruptcy.


The Secret to Stop IRS Collections For Good:


If you meet the Tax Debt Bankruptcy requirements, the IRS can't take any collection actions against you under Automatic Stay of Collections.

But you have to be careful, even if you pass their tests, bankruptcy is not exactly your Get-Out-Of-Tax-Debt-Free Card. In a few short years, the IRS may still be able to collect on your debt!

Always consult with a professional before you attempt to discharge your debt through bankruptcy or you could make your tax situation worse in the long run!

IRS Tax Debt? Learn the Top 5 Ways to Stay Above Water When You Owe the IRS!

IRS notices are making their rounds. Use these Top 5 valuable survival techniques to buy some time and stay above water when you owe the IRS!

1. Do You Really Owe: Even the IRS makes mistakes. Go over all the information in your notice and make sure the IRS has their facts straight. They usually do, but it's always worth the effort.

2. Do something! No matter what notice the IRS sends in the mail, you've got a tight deadline to get to work. Do not ignore your tax debt! No matter how you've gotten the debt, it's there and you need to do something about it before the IRS issues a levy or a lien.

3. Look for Funds: If you can collect enough funds to pay off your tax debt, then you should do that. It will save you money in penalties and interest in the long run.

4. Choose a Payment Plan: Unfortunately, many people who owe the IRS simply don't have a way to pay the whole thing off. There are many kinds of Installment Agreement payment plans out there. Make sure that you find the right one for your situation...and your wallet.

5. Don't wait for the IRS to contact you! Because of the size of the IRS everything moves slowly, at first. When I was an IRS Hitman some people wouldn't get notification of their debt for up to a year. Believe me, when you get the first notice in the mail the IRS has already targeted you, your bank accounts, and sometimes, even your assets. Don't delay if you want to protect your money and your life!

Buy Time with the IRS: Once you contact a professional to resolve your debt, the clock stops. The IRS will not issue a lien or a levy as long as you or a licensed professional is actively negotiating a payment arrangement with the IRS. This buys time and keeps your bank account or paycheck from being levied!

Insider Tips to Stop IRS Notice of Deficiency- And Save Your Cash!

You're in the green, you paid your taxes! So why did the IRS send you a "Notice of Deficiency"? This notice means the IRS believes you should pay even more on your taxes. If you know you don't owe, get the facts and learn your options for contesting this notice!

The Deadline: Time is critical. If you don't respond with the attached response sheet that you do not agree with the changes they have made by the deadline on your letter, the amount the IRS claims you owe will be set in stone. From there, the IRS may try to seize your funds by force! You can call the IRS, but they're not going to extend your deadline. So what should you do next?

Know the Loopholes: The IRS makes mistakes. Sure, those mistakes are rare in the grand scale of things but they do happen! Sometimes your "Notice of Deficiency" is sent to the wrong address. If this is proven, Tax Court will dismiss the case. But if they feel you owe, they will issue another "Notice of Deficiency", so be prepared!

Take it to Tax Court: You can take them to court if you know you don't owe. The IRS Notice of Deficiency gives you instructions for filing a petition with the tax court (this is Form 12203 "request for Appeals Review"). The court may schedule a case for a trial. Use the time before the court date to round up documents which prove you do not owe the IRS.

But lets face the facts, it's going to be next to impossible to win your case against the IRS. You'll need substantial proof. Don't even think of taking the IRS on unless you truly do not owe and you have truly done your homework. You may want to talk to a reputable tax debt professional before deciding you have a valid case to make.

3 Simple Steps to File Unfiled Tax Returns

Get a move on! You're breaking federal law when you have unfiled tax returns. It's only a matter of time before you get caught, and when you do you face fines, penalties, and even jail time. Stop procrastinating and get caught up with the IRS.

Step One: Gather The Old Documentation

If you're catching up on years of unfiled taxes, it will take some detective work to find old W-2 and 1099 tax forms. Start by asking former employers if they have copies on hand. Otherwise, call up the IRS at 1-800-829-1040 and ask for your Wage & Income Transcripts. You can also use Form 4852, "Substitute W-2." Attach it to the front of your tax return.

Step Two: Prepare and File Forms

After you have the proper forms and publications, you need to sign and date your Tax Return (and important step that too many omit). Be sure you include all sources of income. Attach any required schedules, forms, and documentation needed.

Step Three: Send It Out

If you received a notice from the IRS, mail your past due return to the address on your notice. If you've never received a notice, send your return to the address in the form instructions.

Past due returns are processed only at certain select service centers. Keep in mind that if you send your past due return to another office it will delay the process.

Meanwhile, if you owe the IRS... The IRS won't stop their collection efforts while you prepare your back taxes and try to get compliant with the IRS. Be careful about how you answer an IRS Agent's probing questions about your tax filing status. If you don't know how to answer the IRS or what to do, just contact me. I'll point you in the right direction.

Is Your Dog a Tax Write-Off? Use Pet Tax Deductions and Reap Huge Savings!

You want  to come up with as many deduction as possible to boost your refund, but beware. Make a mistake, and you could wind up owing the IRS instead of earning extra dough. Many people ask me if their pets are deductible. Believe it or not, they are! 

First Things First: He may be Man's Best Friend, but do NOT deduct Fido as a dependent. Your pets do not have social security numbers, they are not your kids. Don't even try it!

Business Pet Tax Deductions: The IRS skims business deductions carefully for signs of fishy deductions. Therefore, any pet-related business deductions must be handled tactfully. You'd better have plenty of evidence to prove why your animals are vital for the business!

Health Pet Tax Deductions: The states that "The costs of buying, training, and maintaining a service animal to assist an individual with mental disabilities may qualify as medical care." What's the catch? You have to prove the service animal is being used primarily for your illness. A legitimate note from your doctor should do the trick.

More Legitimate Pet Tax Deductions

- Guard Dog Tax Deduction: If you have Guard Dogs protecting your business the expenses for taking care of them could qualify for a Pet Tax Deduction. Your animal must be a certified and trained guard dog, and it helps if he implies the guard dog aesthetic. Think Pit Bulls, Rottweilers, and German Shepherds, not Poodles!

- Cat Food Tax Deduction: Owners of a junkyard successfully wrote off the cost of cat food they used to attract wild cats. How did they get away with it? The felines killed snakes and rats on the property and made it a safer place for customers.This deduction made it all the way to U.S. Tax Court, and won.

- Pet Traveling Expenses Tax Deduction: If you qualify for moving expenses deductions (usually for changing jobs), you can deduct all moving expenses- including the cost of moving your dog, cats, or other pets. No matter how exotic your animal is, it will be treated the same as moving your other possessions.

Deduct Your Pets, But Do it Right! 

If your animal truly qualifies for a tax deduction, have at it! But remember to do it right. Consult with a professional first, you can send me your tax deduction questions if you'd like, but just get a second opinion before you pull the trigger. You don't want to owe the IRS because you went a little crazy with the Pet Tax Deductions!

Top 3 Tips to Prevent IRS Identity Theft

Don't let a "Tax Scammer" run away with your identity! Times are tough and identity thieves are getting desperate! Now internet scammers are pretending to be Revenue Officers, IRS Agents, and Tax Collectors. Don't put your life at risk, learn the Top 3 Ways to Prevent IRS Identity Theft!

1. NEVER open e-mail that claims to be from the IRS. The IRS has said it themselves, they never send unsolicited e-mail!

2. Likewise, DON'T give information over the phone to anyone claiming to be the IRS. The IRS isn't like normal collection agencies. They send you notices of your debt, then hit you with levies, liens and seizures. They don't need to call and beg you to pay!

3. The ONLY IRS official website is www.irs.gov. Any others claiming to be the IRS website are frauds!

Really, it's short and simple. The IRS doesn't send e-mails, the IRS will not call you, and there is only ONE official IRS website. It's important to be cautious and protect your personal information from getting into the grubby paws of an identity thief.

Top 3 Ways to Stop a Tax Lien & Save Your Home!

The Tax Lien Bomb is dropped. Your home, vehicles, and assets are at risk of seizure. Forget applying for loans or credit cards because with a Tax Lien, your credit report is shot! Don't let the IRS ruin your financial future, learn the Top 3 Ways to Banish Your Tax Lien for Good!

1.     Pay Up: Sorry to say it, but the #1 to put that Tax Lien behind you is pay your tax debt in full. The sooner, the better! If you can apply for a loan and pay off your debt, do so. If you can borrow from family, swallow your pride and get it paid!

2.    Pay the IRS Monthly: Not everyone can fork up the cash and pay in full. These individuals may qualify for an IRS Installment Agreement. When you're locked into an Installment Agreement with the IRS, you agree to pay a set amount on your debt monthly until the debt is paid in full. This won't remove your Tax Lien immediately, but it will set you on the track to getting rid of the Tax Lien and your Tax Debt forever. If you owe less than $25,000 and do not already have a tax lien, it may entirely prevent a tax lien from ever being placed.


3.    Make an IRS Settlement:  It's possible to settle your IRS Tax Debt with an IRS Offer in Compromise. The IRS doesn't let just anyone in on this exclusive offer. Only those in a dire financial situation will qualify to settle their Tax Debt for less than they owe.


Applying for an Offer in Compromise can be very expensive, if you don't want to be out hundreds of even thousands of dollars you better get help from the professionals first. If you need help determining if you qualify to settle your tax debt with an Offer in Compromise fill out the form or call the number to the right.


Temporary Lien Removal: Sometimes an emergency makes removal of a Tax Lien urgent. You might be moving or desperate to sell your home. In rare cases, the IRS will temporarily remove a Tax Lien from a primary residence temporarily. In emergencies like this, get professional help to ensure swift removal of the Tax Lien.

Saving Small Town America from the Big Bad IRS

Today I've been looking back at Lynch Kentucky, a picturesque mountain town that wound up owing the IRS a quarter of a million dollars. The debt was through no fault of their own, but the IRS didn't care. The historic mountain town was at the IRS's mercy, and that's where I came in.

It was hard to get the IRS to back off this defenseless town, but I never gave up. At the end of it all, I set up Lynch, Kentucky in an agreement that saved their lifestyle from destruction by the IRS.

Many of my readers feel the same way the citizens of Lynch, Kentucky felt. Backs against the wall, and no where to turn. Completely at the IRS's mercy. I've made it my mission to help all American citizens with hopes and dreams threatened by the IRS.

You can read and watch details of my journey to Lynch Kentucky on my main website. The new feature details how I saved the town from being wiped off the map by the IRS: The IRS Hitman Saves a Town.

Since people always ask, there are three ways to contact me if you need my help. You can call the phone, fill out the form, or send me an e-mail. I'll always reply to your tax questions as soon as time allows.

Can I Wait Out my Back Taxes?

Time's Ticking Away... It's true, the IRS has a limited amount of time to collect on your back taxes (if you think 10 years is a limited amount of time, that is). The time period the IRS has to collect on the debt you how is called the "Statute of Limitations". If you don't pay your back taxes off in full before the end of the Statute your tax debt will be dismissed and you won't owe the IRS any additional fees.

The Waiting Game... Don't think you can put off paying your debt for 10 years. Sure, the statutes may expire in 10 years, but the IRS will use every collection method possible to collect from you. It's gonna be a long 10 years!

Then there are IRS Statute Exceptions... The 10 year Statute of Limitations isn't exactly set in stone. Three factors could extend the amount of time the IRS has to collect on your tax debt.

Bankruptcy: It takes a while for bankruptcy to be discharged. The IRS can't issue collection actions during this time, but this comes at a great cost.  The amount of time you were in the bankruptcy extends to time of the IRS Statute. For example if it took you two years for your bankruptcy to get discharged, then 2 years gets added on to the Statute of Limitations. 

Offer in Compromise:  An Offer in Compromise, or tax debt settlement, can take a year or more to reach a resolution. Much like a bankruptcy, the length of time it takes for the Offer to be approved or denied increases the length of the Statute.

Get time on your side... Yes, you can "wait out" your tax debt. But do you want to? 10 or more years are a long time to live with a debt, and it will feel like a lifetime with the IRS constantly threatening you. Just bite the bullet, and take care of your tax debt now. Don't let it drag on for a decade!

Top 5 IRS Bank Levy Questions & Answers

When a Bank Levy strikes all of your hard earned cash will be gone in an instant. If you receive a "Notice of Intent to Levy" from the IRS; beware! A Bank Levy can strike at any time.


1. Can the IRS take every penny you have out of your bank account?

Yes! The IRS will levy every cent from your checking account, savings account, or any other account for that matter. If you own a business, important business accounts and even accounts receivable will not be safe from the IRS. 

2. Can the IRS levy my PayPal account?

Absolutely! Think of it this way: if you have access to an account, so does the IRS. There's no way to keep the funds in PayPal safe from an IRS levy unless you don't owe the IRS.  

3. Can the IRS take all of your money without notice?

The IRS always sends notices before your funds are seized, so look out for them. The letters to beware are:

- IRS Letter 1058 - Final Notice of Intent to Levy and Notice of Your Right to A Hearing

- IRS Notice CP 90- Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing 

However, if the IRS has the wrong address on file for you, may not be receiving these notices. You could be levied without warning!

4. How do I remove an IRS bank levy?

Once your bank is notified of your Bank Levy you will only have 21 days to get to work and save your money. To get any of that money back, you need to prove extreme financial hardship. The IRS can come after your accounts again. So, work fast to contact the IRS and negotiate another method of payment to keep their hands out of your accounts.


5. Will the IRS leave me with enough money in my bank account to pay my bills?

No! Whether you've got bills to pay or not is not the IRS's problem. You didn't pay the most important bill of all- your tax bill! This is why it's important to work with a professional if your facing a bank levy. They will work fast to prevent your money from being seized or even get your funds back so you can keep food on the table and a roof over your head! 

Get Help NOW: When it comes to an imminent bank levy it's smart to work with a professional! If you make a wrong move with the IRS, all your money could be gone in a flash! If you want my help stopping a bank levy or retrieving money seized, fill out the form to the right.

Are Your Tax Dollars Supporting the Ghostbusters?

It's True, your tax dollars are supporting an organization that investigates UFO sightings, alien abductions, unknown creatures, and other mysteries best explored by the cast of the X-Files or better yet, The Ghostbusters. ParaNexus Anomalous Research Association, inc. was approved by the IRS for tax-exempt status, allowing them access to grants and other public funding.

The director of investigations for ParaNexus had this to say:

“We take a serious...professional approach to helping people who are experiencing things they may not understand...people call us as a last resort because they are worried that others will think they’re crazy. But we are the least likely ones to think that people who experience unusual events are crazy. Sometimes it just helps to talk to someone who understands.”

ParaNexus Academy jumped a hurdle William C. Naylor's Infamous Sperm Bank couldn't. They proved their organization benefits the public and won their tax-exempt status.

So how did these "Ghostbusters" qualify for Tax-Exempt status? It's simple, they filled out The IRS Application 501(c)(3) and qualified for Tax-Empty status as a Scientific and Educational organization. They were professional and patient, proving they qualified and waiting 8 months to get the final word on their status from the IRS.

Want to see if your business qualifies for federal tax-exempt status? Check out the IRS's list of Types of Tax-Exempt Organizations and see if you qualify. If the "Ghostbusters" can; why can't you?

Don't Trust the Ghetto Tax Advocate

Harlem Rapper and CEO Jim Jones may be successful in his music career, but don't let this man come near your taxes. I found the following information in an April 2005 issue of Vibe Magazine.

Write that dirt off your shoulder

"Everything you do when you're in music is a write-off. My whole lifestyle is hop hop. Everything- my toothbrush is hip hop, my toothpaste. I gotta brush my teeth thoroughly before I go in the booth and do my record- we writing that off."

The Golden Rule for deducting business expenses is that the expense is "Ordinary and Necessary". You have to brush your teeth no matter what, so it it a business expense? No. And don't even think of deducting your fancy shampoo, gel, or hairspray, either.

"Yeah, we just writing sh*it off, you dig? My clothes, my cars."

You won't get empathy from the IRS when you try to write off expensive clothes and cars. You'll get an Audit.

My Accountant Handles That

"I don't even know what a W-2 look like, a tax ID number- I don't know what none of that sh*t is."

And you're giving me tax advice? Rapper Young Buck is dealing with a 300K Tax Debt because he thought he accountant was handling his tax issues and didn't bother to keep tabs. Remember, if your accountant messes up it will be your tax debt. Take responsibility and check on your tax filings.

Make Crime Pay

"You gotta love the white people that do white-collar crime. They steal about $800 million, don't pay no taxes on it, do a bit for tax evasion, and come back home and buy a yacht when they get out...That's the type of time I want to do. If you gonna turn me into a billionaire and tell me I gotta do a bid for six months, I'm there.Where do I sign up?"

Or you'll emerge from jail after several years completely broke after your back taxes and multiple fines have been paid off. 

F- The Man...I'm The Man

 "I gotta give 50 percent to the government, and they say they're using it fro schools and welfare and all that stuff? I ain't with that sh*t man. I want my money. F- taxes- I want mine."

 Too bad. Quit the whining and pay up or you'll end up paying more from jail. The choice is yours. 

The Real Lesson: History has proven that you shouldn't take a hip hop star's tax advice. Or any celebrity's tax advice, for that matter. The only easy way out with taxes is to pay what you owe on time and in full.

The IRS Hitman: Answering Your Top Tax Questions

I'm writing a definitive guide of Top Tax Questions. I've reviewed the data, but I want to hear it from you: What are YOUR top Tax Questions? Send me an e-mail and let me know; I've got the answers.

Back by popular demand; let the Hitman answer your pressing Tax Debt Questions. Read my frequently asked questions and answers and get yourself out from under your tax debt. And remember, if you need serious help with your tax debt, I'm only an e-mail away.

I can’t pay my tax debt. I have no assets, and I live under the poverty level. What can the IRS do to me?

If you are truly unable to pay the IRS and you have nothing available for them to seize then they can’t collect on the debt. You can be put into a status called Currently Non Collectible in this situation. The IRS can revoke that status if your financial situation ever improves.

Can I get a home loan with a tax lien on my credit?
Probably not since a tax lien is a serious black mark on your credit. In fact you’re not going to be able to get a loan for anything. Unfortunately the only way to get a tax lien removed from your credit is to pay off your full debt.

How much of my wages can the IRS garnish?
The IRS determines how much they’re going to garnish from your wages based on the filing status and number of allowable exemptions on your W-4. Generally, what you are left with is not enough to cover basic living expenses.

Can I write off the tuition to my child’s private school on my taxes?
No, the IRS does not consider private school tuition to be a necessary expense. It falls into the IRS’s luxury category making it impossible to claim.

Can the IRS come after me and my assets if I marry someone with a tax debt?
Yes, they can. When you marry someone with a tax debt you also marry their tax debt. That means the IRS can garnish your wages, and seize your bank accounts just as they can your spouse.

Is there any way to stop the IRS from taking my tax return refund?

If you have an IRS debt, there isn’t any way to stop them from applying your refund to your debt. Remember, until that debt is paid everything you have the IRS can take to apply to your debt.

If two people claim the same child as a tax credit, for example the child’s grandparent and parent. Who gets the child tax credit?

Child tax credit goes in the order of the child’s relationship to whoever is claiming them. So with the above example the parent would have the first crack at the credit over the grandparent. Now if the grandparent can prove that they had taken care of the child for the tax year in question then they would be eligible for the credit; but the burden of proof rests on them.

Can you get a rapid refund if you owe the IRS?

No, if you owe the IRS then any refund you’re entitled to goes to your debt. What’s even worse about the rapid refund is that a rapid refund is a loan from the tax prep company that gave it to you. So if you tried to get a rapid refund while you owe the IRS, not only will you still owe the IRS, but now you have to also pay back the rapid refund loan.

I look forward to receiving more questions about your tax problems. Just drop me a line

The Strangest Tax Write-Offs...Ever!

No, I'm not pulling your leg. This Top 4 List of the Strangest Tax Deductions are 100% fact. They're not always right, and many don't get away with them, but strange tax offs never fail to be entertaining.



Free Beer

Giving away free beer to bring in customers? Then the cost of the beer qualifies as a tax deduction. But you better be ready to prove that beer was for "business use only"!

The Arson Idiot

A furniture store owner hired an arsonist to burn down his failing furniture store. He collected $500,000 in insurance money and nearly got away with the crime. In an idiotic move, he claimed the $10,000 consulting fee he paid to the arsonist as a deduction! He went straight to prison and was hit with $6,000 in IRS fines.

Breast Implants

Cynthia Hess, Stage Name, "Chesty Love" defended her right to write-off her breast implants. She made it all the way to the United States Tax Court and won, with the court saying that since she makes her living stripping, breast implants are an "ordinary and necessary" business deduction.

Navajo Healing Ceremonies

New age alternative medical treatments like electric shock, whirlpool baths, and hydrotherapy can sometimes be deducted as legit medical expenses. But who knew Navajo Healing Cerminories, which remove pain and curses with chants and songs, can be deducted as long as it is "prescribed for a medical purpose or to alleviate a condition.

The Sperm Wars

William Magdalin tried to deduct "sperm costs", but since the New York City law says the sperm costs must be for an underlying medical condition (whatever that means) his claim was denied.

William C. Naylor wants his Sperm Bank to Qualify for Nonprofit Status. Sure, he donates sperm to "those in need", but only to a select few that qualify. On top of that, Naylor is the ONLY sperm donor. Obviously, Nonprofit status is denied to this "charity".


The Lesson of the Day: Don't get too creative with your write-offs, claim what deductions you can, but don't get thrown in jail for trying to take advantage of a loop hole!

Pay Your Taxes: Don't End Up Like the "Rich and the Careless"

More details have been released on two famous Tax Man Attacks on celebrities.

Tax Attack: Young Buck

Rapper Young Buck (David Darnell Brown) got a surprise visit from IRS Special Agents.

  

All I'm thinkin' 'bout is gettin' paid
Big yachts, mansions, buyin' real estate
You think Buck goin' bankrupt?!
Kill yourself! 

-Young Buck

Ironically, Young Buck is doing just that- filing for Bankruptcy following his infamous seizure.

The IRS seizure was a cold move, but how can you make $19,170 per month and have $60 million in assets while not worrying about the tax man? Take the lesson, folks.

Tax Attack: Paul Hogan

Paul Hogan, The Crocodile Dundee Himself, is still fighting his Tax Charges from his mother country, Australia. He's been barred from leaving the country until he pays the Tax Man the millions he owes. 

"Come and get me, you miserable bastards!"
-Paul "The Crocodile Dundee" Hogan

Australia has accused Crocodile Dundee actor Paul Hogan of offshore tax evasion, saying he hid tens of millions in offshore tax havens. Paul Hogan claims, if anything, he's paid too much taxes in Australia:

"If I was a tax evader, which I'm not, I must be the dumbest one in the world to keep coming back here instead of fleeing to a tax haven ... I know they're absolutely desperate to nail some high-profile character with money to justify the expense to the taxpayer."

As more details are unveiled on celebrity cases the message is clear; pay your taxes. The IRS makes exceptions for no one. No me, not you, and especially not high profile celebrities!