Attorney Blog

The Ultimate Guide For IRS Problems NOW AVAILABLE FOR YOUR KINDLE!!!

Thu, 16 Feb 2012 08:00:00 EST

Travis Watkins book, The Ultimate Survival Guide for IRS Problems, is scheduled to hit bookstores March 15, 2012. The book is permanently available NOW for pre-release at Amazon's Kindle Store. Click here to order today.

What's That Smell? Oh, It's The IRS' "New" "Fresh Start" Program!

Wed, 08 Feb 2012 08:00:00 EST

I heard one of those new public service announcements for the IRS "Fresh Start" program this morning. These things crack me up. The IRS is hitting the airwaves hard with this message. Here's one of the scripts:

MUSIC UP AND UNDER THROUGHOUT

AUTO REPAIR SHOP SOUNDS
MR MORRIS: Hey Joe, you’re here pretty early.
JOE:  Yes sir, trying to make a little extra. I really need the money.
MR MORRIS: So, you got that bigger apartment you were talking about?
JOE:       Ah, no. I had to put that off.
MR MORRIS:      Must be your school loans are coming due.
JOE: No, I’m OK on those. It’s, uh …
MR MORRIS: Joe, what’s up? You look worried.
JOE:  It’s my taxes. I still owe money for last year. And, now it looks like I’m going to owe more for this year. I just don’t have the money.
MR MORRIS:     You know, I think I can help.
JOE:  Mr. Morris, I don’t want …..
MR MORRIS:   Just some advice, Joe. Go to irs.gov, and read up on the new Fresh Start effort and other programs. You can pay some now, and work out a plan to pay the rest in installments over time.
JOE:  Huh. Fresh Start. Payments over time.
MR MORRIS: Oh, which reminds me, Joe. Overtime. You know, I think we can get you more hours.
JOE:  Thanks.
MR MORRIS: Ok.
ANNCR:   irs.gov. From payment options to time-saving tools, it’s the best tax tip of all.
What "Mr. Morris" (we'll call him Oscar, he's an actor, let's face it) fails to mention to Joe (the mechanic?) is that back-breaking penalties and interest are going to make it very difficult for Joe to ever get out of his mess, even with working two jobs. That is, if he qualifies for an installment agreement at all.

Now, I'm not suggesting that installment agreements are bad per se. I'm just wondering where is the "freshness" to this "fresh start" program? Installment agreements have been around the IRS forever, they aren't new. They have always accrued penalties and interest, and will continue to do so during our lifetimes. For that reason, they are not the one-size-fits-all cure for tax problems that the IRS would have you believe.

What is especially misleading about this ad is that Joe and others like him may not even get an automatic payment plan from the IRS.  For instance, 1) Joe may owe more than $10,000 to the IRS. 2) He may have equity that the IRS would like to liquidate in his home or his cars. 3) He may have previously had a payment plan in the past. 4) He may have failed to pay on time in the last 5 years. 5) He may not be able to pay the amount owed in 3 years. 6) He may be unwilling to open up his life to the IRS and submit financial statements that show he cannot pay in full on the spot. If even one of these conditions is present, Joe has got to jump through more hoops to get an installment agreement with the IRS.

Most disturbing about this PSA is that there are other great IRS programs that can give a true fresh start for taxpayers. For instance, the offer in compromise, currently not collectible status, and bankruptcy (in certain circumstances) can cut taxes to zero. Penalties can be abated for reasonable cause. Installment agreements are usually the collection alternative of last resort.

I had hoped government agencies learned their lesson when the U.S. Census Bureau paid millions to have a clever ad running during the most expensive time slot in American advertising (the 2011 Super Bowl).  Now, the IRS is faced with the daunting task of closing the tax gap AND paying for expensive advertising!

Don't settle for the IRS' preferred collection alternative before you know the full gamut of rights you may have. Most taxpayers have more than one route to a true fresh start. Learn more about those options from a local licensed tax lawyer like Travis Watkins today at 607-1192 or 1-800-721-7054.

The (not so) Skinny on IRS Penalties and Interest

Tue, 07 Feb 2012 08:00:00 EST

Have you ever stopped to think about the nature of IRS penalties and interest? Essentially, this is a tax on tax. You get taxed, and then you are taxed again in the form of a penalty for doing (or not doing) something properly in relation to the underlying tax. Then, like any lender, the IRS compounds interest on the penalty and underlying tax until it is paid or otherwise forgiven.

Here are the events that will cause you a tax penalties:

Under estimate and late payment penalties;

Late income tax return penalties;

Accuracy related penalties;

Late information return penalties;

100% penalties on unpaid withholding taxes (payroll);

Penalties for failure to provide foreign information;

Excise taxes with the effect of penalties;

Tax fraud penalties;

Tax adviser penalties...

Have I missed any? Let me know if I have. We have become a culture of taxed people, and we accept this from the IRS as business as usual. What many don't realize is just how easy it is to get penalties (and the interest associated with those penalties) abated, i.e. forgiven, in many circumstances. Nearly half of all penalty abatement requests are granted. Watch my video on this page to learn more. Break free from crushing IRS penalties today by calling Oklahoma lawyer, Travis Watkins, today at 405-607-1192.

Economy to Remain Sluggish As Taxes Increase

Thu, 02 Feb 2012 08:00:00 EST

The Congressional Budget Office (CBO) predicts that the US economy will perform below its potential for the next 6 years as unemployment and taxes rise as much as 30% between 2012 and 2014.

CBO blames the rising tax on, read my lips...new taxes, new fees and new penalties. Also to blame are the current or scheduled expiration of tax cuts. This is, of course, bad news for taxpayers and the economy itself, as Congress attempts to tax and spend its way out of the mess. It seems that anyone with money will duck for cover, in order to weather the storm.

Sick of this yet? Isn't the definition of insanity: doing the same things repeatedly and expecting different results? Economies are never stimulated by regulation and taxation.

If you are being harassed by the IRS, getting scary certified mail or visits from revenue officers, you are not alone. Call local, licensed OKC lawyer, Travis Watkins at 405-607-1192 for help today!

IRS' Taxpayers Advocate Office Says Taxpayers Can Have a Helpful or Tough IRS, But Not Both!

Thu, 26 Jan 2012 08:00:00 EST

I told you that Congress has given the IRS a dose of what's going on on Main Street for the taxpayers it serves in 2012: a reduced budget for the second year in a row.

So, the IRS complains that it won't be able to walk and chew gum at the same time anymore, with these cuts.  According to the IRS Taxpayer's Advocate Office, taxpayers will now have to choose between continuing good service (huh?) and enforcement. Ah...choices, choices.

Only 1/3 of scared taxpayers polled by the IRS Oversight Board had the nerve to admit that good service takes a back seat to enforcement at the IRS already. I haven't seen the polls, but I would venture to guess that 100% of this group had dealt first hand with IRS enforcement agents.

The IRS also blames Congress' obsession with changing the tax code daily: another complaint echoed on Main Street.  Well, the IRS is a work in progress, I suppose.  Although, like many of us, its ideology is becoming more conservative with age and adversity.

Don't bank on the leaner, more mature IRS to go easy on individual enforcement matters any time soon.  If the IRS is taking its hurt feelings out on you, I'm here for you.  Call OKC tax lawyer, Travis Watkins, at 405.607.1192 today!

IRS Releases Unlawful Levy of Attorney Trust Account

Wed, 25 Jan 2012 08:00:00 EST

I wrote several weeks ago about a client of mine that was facing an IRS levy of an attorney's client trust account. Well, the IRS released the levy, and the appeals order was so good, my client has authorized me to share it with you. Certain identifiers have been redacted, to protect the innocent:

Don't let the IRS push you around with unlawful scare tactics! Hire me and take it to them. Call me at 1-800-721-7054, and let's take back the power together.

IRS Folds on Professional Gambling Expenses

Tue, 24 Jan 2012 08:00:00 EST

The IRS knows when to hold 'em and when to fold 'em when it comes to professional gambling expenses. Gamblers have always been able to offset gambling losses against winnings. Professional gamblers, though, have historically been able to use mileage, food and lodging as losses to offset winnings. However, they have never been able to go below zero. In other words, you could never expense more than your winnings.

Now, bowing to pressure, the IRS will allow gamblers to list these gambling expenses on Schedule C of their 1040 tax returns. A word of caution, though: this is only for "professional gamblers," not recreational ones. Another word of caution: this only applies to LEGALIZED gambling.

So, who is a professional gambler under the IRS code? The answer is, it's complicated. But, if you are interested in the IRS particulars, give me a call at 405-607-1192. Generally speaking, if you derive the majority of your income from gambling and it is your intent to make your living in this manner, you fit the bill.

The down-side is that professional gamblers have to pay self-employment tax (15.3%) in addition to personal income tax. Oh, that, and the likelihood of losing your shirt, of course. Happy gaming!

Higher Incomes Get Higher Audit Scrutiny New IRS Statistics Show

Mon, 23 Jan 2012 08:00:00 EST

The IRS has released some of its year end reports for 2011, including tax audit rates. If you made over $1 million, and you escaped an audit in 2011, consider yourself slightly luckier than a Russian Roulette player. The IRS audited 1 out of every 8 tax returns (12.8%) in this bracket, compared to 1 out of every 90 returns (1.11%) in brackets across the board. That number stayed the same as 2010, likely due to diminishing numbers of tax returns being filed in 2011.

If you made between $200,000 and $1 million in 2011, you felt the audit pressure as well. 1 out of every 25 in this bracket (4%) were audited by mail or in person. If you made less than $200,000 the numbers fell below the median audit percentage (to 1.02%).

Translation, the IRS, with less money budgeted to it in 2012, has higher income-earners in its cross-hairs in attempting to close the tax gap. These numbers are far from random. The release of these statistics comes on the heels of the IRS' announcement of vamped up snooping techniques. Clearly, the IRS has its eye on you!

Private eyes are watching you!

If you have become a target of an IRS audit, the IRS is very interested in collecting more than you paid, even if your return is 100% legit. That means, you need someone in your corner to fight for your rights. Call Travis Watkins in Oklahoma City at 405-607-1192 today.

You're Dream-ing. The Tax Woes of Terius Nash

Wed, 18 Jan 2012 08:00:00 EST

2012 is turning out to be a blockbuster for celebrity tax trouble. This time, it's Terius Nash a/k/a "the Dream." He owes a $117,000 tax debt to the State of Georgia. The Dream is a music producer, whose directed hits include "Umbrella," by Rihanna. The Dream just recently inked his divorce from singer-songwriter/model/actress, Christian Milian.

The $117,000 tax debt started as a $60,500 state income tax debt that ballooned into this monster, given the penalties and interest associated with the principal.

As The Dream can tell you, state tax troubles can be as devastating as IRS problems. Often, state liabilities run side by side with federal tax issues, and state agencies are often tougher in the immediate sense than the IRS. The Oklahoma Tax Commission, for example, will hire an outside collection firm to ruin your credit and sue for a judgment to collect its debt. This is in addition to state tax warrants, liens and adverse credit effects you may already have.

The penalties and interest that compound with the debt can also be back breaking. But there is hope, even against the Oklahoma Tax Commission when it comes to penalties and interest.

Don't go it alone against the Oklahoma Tax Commission. Call a local, licensed Oklahoma tax lawyer to help you out. Call me, Travis Watkins, today at 1-800-721-7054.

Mean Girl Gets Mean Tax Bill, the Life and Taxing Times of Lindsay Lohan

Tue, 17 Jan 2012 08:00:00 EST

Add $93,000 of overdue tax liability to Lindsay Lohan's list of life problems. The IRS filed a federal tax lien for LiLo's 2009 debt. According to Lohan's people, Lohan thought she had people that took care of this kind of stuff! The people responsible for letting Lohan's tax problems slip through the cracks have been fired and replaced. Lohan can now get back to important stuff like drinking and driving, sexting and attending most of her mandatory probation activities. Why do trainwreck celebs not hire chaffeurs?
As weak as Lohan's excuses are, they could still be enough to get the crushing penalties associated with the taxes abated or forgiven, especially since the accountants and other handlers responsible for the problem have been sacked and replaced (thus, preventing further liabilities, in theory). The IRS standard for abatement of penalties is "reasonable cause." If there is a legitimate reason that you didn't file or pay on time, don't minimize your excuses.

Hire a local tax lawyer to put together a request for abatement under this reasonable cause standard. About half of these requests are granted. A good amount of the requests that the IRS rejects for abatement may still be candidates for other debt relief programs such as an installment agreement. So, you really have nothing to lose. Call the OKC and Tulsa tax lawyer "in the know," Travis Watkins, at 405-607-1192. I would love to help.

Banner Week for TaxhelpOK

Sat, 14 Jan 2012 08:00:00 EST

What a week!!! My boots hurt from kicking some serious IRS tail, and it's been a banner week.

We got a bank levy released on the 19th day of the account freeze for a client, stopped a continuing wage levy for another client, and got managerial approval for Currently Not Collectible (Status 53, a/k/a CNC).

As I have said many times now, the IRS is getting the picture that the economy ain't what it used to be, and they are loosening up on their collection alternative programs. Ironically, the IRS got its own dose of this with massive budget cuts a-la Congress this week.

There may have never been a better time to end your tax problem. Make 2012 the year that you put your life back together by stopping the IRS in its tracks. Call Oklahoma tax lawyer, Travis Watkins, at 1-800-721-7054 and we'll help you do it.

IRS Complains Budget Cuts Will Hurt Taxpayers

Fri, 13 Jan 2012 08:00:00 EST

In some very sad news this week, the IRS complains that Congress is harming it by cutting back its budget by $300 million. That sounds like alot until you consider that this year's budget is still $11.8 billion. So, like the rest of us, the IRS too will have to make due with less this year. The Obama camp reports that the cuts were $1.5 billion more than he requested from Congress. So, they got that going for them...

"I just lose it every time I hear that tiny violin playing IRS Budget Cuts in C Minor"

The IRS will not go quietly. The parade of horribles, according to the Service, will include a diminished ability to "help" taxpayers and detect fraud in claimed taxpayer refunds.

If the IRS is still bugging you, despite its hurt feelings over these budget cuts, get an Oklahoma tax professional in your corner to help you. Call Travis Watkins at 405-607-1192 today.

Breaking News! Tax Giant, JK Harris, Has Filed Bankruptcy, Ceased Operations and Sought Reorganization or Buyout

Thu, 12 Jan 2012 08:00:00 EST

Class action lawsuits, consumer and attorney general complaints and heavy debt (including tax debt) have all played a part in tax resolution giant, JK Harris, filing for bankruptcy protection and letting go all its employees on January 31, 2011.

To escape receivership, JK Harris filed for Chapter 11 reorganization recently. Rumors are circulating that JK Harris' few assets could be bought out by Tax Masters, LLC. Tax Masters has similar problems. Read more about the bankruptcy here.

Don't be fooled by the big tax resolution giants. Hire a local, licensed lawyer to help you in this process. Call Oklahoma City lawyer, Travis Watkins, at 1-800-721-7054 today!

JK Harris Goes Down in Flames, and More Tax Giants Will Follow (Lessons from the JK Harris Bankruptcy)

Tue, 10 Jan 2012 08:00:00 EST

Soaked with debt and consumer complaints, the tax mega-giant, JK Harris, has filed for bankruptcy and has ceased operations. Read my article on the particulars. Don't get fooled by these out of state outfits promising to end your tax problems!

The failed JK Harris experiment teaches Oklahomans the following 3 things:

1. Out-of-state salesmen, like JK Harris, are a dime a dozen when it comes to promising big, delivering small (or not at all), on tax resolution. It seems a new outfit pops up where one leaves off. Should Tax Masters, Inc. buy up the few assets JK Harris may have at the end of bankruptcy, we can expect the trend to continue. I predict that Tax Masters will suffer the same fate at the hands of the consumers and various state attorneys general that JK Harris has within the next 3 years. In this regard, class-action lawyers are actively seeking members to go after Tax Masters. This means more consumers will likely be left holding the bag at the end of the day;

2.These out-of-state salesmen spend boat loads of money (in the billions) capitalizing on vulnerable taxpayers through a barrage of advertising;

3. IRS problems are a highly emotional, and often devastating, event in a person's life. You are much more prone to give into high pressure, high emotion, rose-colored sales techniques when the IRS is bearing down on you. Do not forget to do your homework! It should come as no surprise to you that many of these outfits have Grade D or F Ratings with the Better Business Bureau;

The best choice you can make when hiring someone to help you through tax problems is to choose a local, licensed professional. Attorneys are at the top of this list because they can file a lawsuit on your behalf if you are not getting results through the normal channels at the IRS. Not all attorneys are created equal in this regard, however. Choose one that practices before the IRS daily. Call Travis Watkins at 405-607-1192 in OKC or 918-877-2794 in Tulsa or 1-800-721-7054, 24 hours a day. We are local, licensed and experienced with the IRS' tactics and procedures.

New IRS Audit Guide Released for Cash Businesses

Wed, 04 Jan 2012 08:00:00 EST

The IRS has just issued a new audit guide to its field examiners to pinpoint errors in underreported income for cab drivers, bail bondsmen, beauticians/stylists, car washes, laundromats, mini-marts and scrap metal dealers.

These businesses have traditionally been predominately cash businesses, and the IRS is cracking down on them in its on-going quest to close the growing tax gap. The guide is meant to educate agents on the methods these industries use to report less income.

Living room of audited cash-business owner, according to IRS agent

This means that if you derive your income from any of these industries, you are well served to know what the IRS is looking at in order to audit you. Call my office at 405-607-1192 today for a free copy of the field examiners' guide. If you have already been contacted about an audit, let's talk today.

IRS to Expand its Continuing Levy Powers

Tue, 03 Jan 2012 08:00:00 EST

The IRS is asking lawmakers to expand its continuing levy powers. There are 2 types of levies: continuing and non-continuing. The IRS wants more power in the continuing levy department because it is the easiest way for the government to collect.

Non-continuing levies are usually bank levies. That means that when a levy hits a bank, the account is frozen from that moment in time and the bank must forward the funds in the account on that day to the IRS in 21 days, unless the bank receives a release directly from the IRS.

On the other hand, the IRS has the power of continuing levies for wages, salary and federal payments such as social security. In other words, once this levy hits, certain exemptions may apply, but the money is forwarded by the employer or federal agency holding that money on a recurring basis until a liability is satisfied.

The IRS has now asked Congress for more continuing levy collection power in four new categories: 1) royalties; 2) rents; 3) nonemployee compensation; and 4) fishing boat proceeds payable to crew members.

Congress, we need...more...power!

Congress is likely to indulge the IRS in its requests for more levy power. If you are facing a levy of any kind, don't go it alone. Call Oklahoma tax lawyer, Travis Watkins, at 405-607-1192 today to assert your rights. Most of these rights are time sensitive. In other words, there is no time to wait!

IRS Levy Mistakes Cause Taxpayer Holiday Headache

Wed, 28 Dec 2011 08:00:00 EST

Today a client experienced an IRS run-around that was so typical, I had to share.

My client is the fiduciary trustee of a trust account. It is not his money. I repeat, it is not his money. The IRS issued a bank levy and specifically referenced the trust account in order to satisfy his delinquent taxes. The particular account conspicuously states that it is a trust account for another's benefit, and that my client is a mere trustee. This is a big IRS no-no. From a banking perspective a trust account is a "special deposit." Did I mention that none of the funds are my client's funds, as he is a mere trustee or steward of the account?

The bank's hands are tied. It must hold the funds 21 days, then turn them over, unless they receive a release of the levy directly from the IRS within the 21 days. Click here for horror stories concerning parties who failed to timely turn over levied funds.

This is a typical situation where the revenue officer knows better, but proceeds with collection activity anyway, hoping that the taxpayer will get discouraged jumping through all the administrative red tape necessary to get the levy released.

I called the revenue officer who issued the levy. She has built up enough government accrued vacation, etc. to take off virtually the entire 2nd half of December for the holidays. I called her supervisor to start a Collection Appeals Program (CAP) request. The CAP request must be signed off on by the direct supervisor. Her supervisor is similarly out for the holidays. I then received a call back from another supervisor, who was helpful, but resistant to release the levy without hearing the revenue officer's reasons for issuing the levy.

This supervisor said that we could wait another 6 days, until next Tuesday (when the R.O. and her immediate supervisor were back from vacation), thus delaying the signature we desparately need in order to move on the CAP appeal and get a decision before the bank must turn over the money. I declined and politely asked her to process the appeal.

"Please have the supervisor's supervisor call me after my rights have expired, ok...?"

If you got tired just mentally running the laps I just illustrated, you are not alone. This is just another day at the IRS collection center. Life is too short to deal with these headaches on your own. If your bank account is being levied, call a local lawyer to go to bat for you. Call me at 1-800-721-7054 today.

IRS Technocrats Use Defeciencies in Their Power of Attorney Form 2848 Against Taxpayers

Fri, 23 Dec 2011 08:00:00 EST

The IRS changed its Power of Attorney Form 2848 back in October, 2011. We are starting to see some problems with it.

The Form 2848 is the document that allows a tax professional to practice on your behalf before the IRS and talk to them, so you don't have to. It's an invaluable document for asserting your rights as a taxpayer through a local, licensed lawyer. It is your absolute right as a taxpayer to have legal representation, and the IRS hates it!

Some IRS agents would nit-pick the old Form 2848, e.g. you forgot to dot the "i" or cross the "t." We would revise the form, send it back, they would find something else wrong with it (or not), and business settling the account would proceed.

Now, the mid-level management technocrats at the IRS have revised the 2848, but it is deficient. It asks for the name (not names) of the taxpayer and provides one spot for the taxpayer's (singular) social security number. This poses a problem for married taxpayers filing jointly. The electronic fields won't let you type more than one social security number.

IRS agents are attempting to use their own deficiency in the form against taxpayers because there is no room for the spouse's name and social security number on the form. We will temporarily combat this problem by having husband and wife sign separate forms. We anticipate that the IRS will then complain that the couple should be on the same form. I believe that this is an example of the IRS trying to create an impediment to taxpayer's absolute right to legal counsel, and we won't stand for it!

If you have any experience dealing with the IRS on your own, you have seen first-hand the frustrations of dealing with low-level and mid-management technocrats there. If my office did not have the power of the lawsuit and the appeals process to keep the IRS in check, all would be lost. Stay tuned for more direction on this valuable form.

If you are frustrated with dealing with the IRS on your own, you have a right to legal representation. Call lawyer Travis Watkins today at 1-800-721-7054.

Revenue Agent Penalties Are Bait for Abatement by their IRS Superiors

Mon, 19 Dec 2011 08:00:00 EST

Recent IRS statistics show that there has been an 800% jump in accuracy penalties assessed on individuals and a 300% jump on business penalty assessments over the last 5 years. This is not good news.

However, the IRS has also reported that at least 25% of those accuracy penalties assessed by revenue agents are subsequently trumped (abated) by the revenue agents' supervisors in 2010. This is good news!

For individual and business taxpayers this means that there has never been a better time to ask for forgiveness of your penalties. Hire a local, licensed lawyer today to help you draft a convincing request for penalty abatement under the IRS' standards for "reasonable cause." Be sure to hire a professional who will extend you a flat services fee to include the request and a couple of appeals, rather than charge you by the hour. We have debt relief packages that include this service. You really have nothing to lose. Call us today at 405.607.1192.

M.C. Hammer Finds IRS Enforcement Techniques Too Legit to Quit

Wed, 14 Dec 2011 08:00:00 EST

Hammer is learning that the IRS can touch this! Rapper, M.C. Hammer a/k/a Stanley Burrell has become the newest celebrity in the headlines for tax evasion. The IRS claims that Hammer owes over $700,000 in taxes from 1996. The IRS has turned the debt over to a collection company that has sued him. Not coincidentally, 1996 was a financially bleak time for Burrell, as he took bankruptcy and ran from creditors. 1996 was a bleak year for anyone who had to listen to Hammer.

Anyway, why is the IRS surfacing to "hammer" a 15 year old debt? The IRS only has 10 years to collect an individual debt. However, there are a plethora of exceptions to the general rule that toll (stop) the limitations period from running. One of those tolling events is bankruptcy. It is unclear without further research how long Hammer was in bankruptcy, but many bankruptcies take years to finalize.

The IRS gets the benefit of all that time a taxpayer is in bankruptcy (the tolling mentioned above), plus a grace period of an additional 180 days. This virtually assures that anyone who does not extinguish their tax liability in bankruptcy will have the IRS waiting for them when they come out of bankruptcy.

If you or a loved one are facing bankruptcy or just coming out of a bankruptcy, the IRS can be relentless, and the tax and bankruptcy laws are confusing. Bankruptcy, if used properly, can be a valuable tool in discharging certain 1040 liabilities, if you otherwise qualify as a candidate for Chapter 7 bankruptcy. It is imperative that you be informed of all your options and not leave this up to chance. Hire a local, licensed lawyer to navigate you through these laws and options at this difficult time. Don't wait, talk to lawyer, Travis Watkins, today at 1-800-721-7054.

Tax Software Data Entry Errors are "Reasonable Cause" for Penalty Abatement

Tue, 13 Dec 2011 08:00:00 EST

Add another event to the ever-expanding litany of "reasonable causes" for IRS penalty abatement/forgiveness.

The Tax Court ruled that penalties may be excused for data entry errors a taxpayer makes while using tax software programs. In Olsen, TC Summ. Op. 2011-131, a taxpayer incorrectly input some interest income, the IRS hit him for a 20% understatement penalty and the Court reversed it all. The taxpayer had acted in good faith and reasonably the Court reasoned.

Remember, "reasonable cause" for penalty forgiveness is just about any legitimate reason you can convince one IRS examiner to believe. A tax attorney can help you draft such a forgiveness request. Call me at 405-607-1192. We draft these requests routinely.

Employer Ordered to Pay Employee's Taxes, Plus 50% Penalty, for Ignoring IRS Wage Levy

Mon, 12 Dec 2011 08:00:00 EST

So, just how powerful is an IRS wage levy? Way-y-y-y-y powerful!

So powerful that an employer was recently hit with the ENTIRE amount of its employees' overdue taxes, including a Draconian 50% penalty, for failure to hand over funds to the IRS. See U.S. v. Heli USA Airways, Inc., U.S. Dist. Ct. Nevada, 09-CV-01339, Nov. 14, 2011.

In situations where a delinquent taxpayer's property (wages, for example) is held by a third-party such as an employer, the IRS serves a notice of levy upon a third party pursuant to 26 U.S.C. Sec. 6332(a). The U.S. Supreme Court has gone so far as to say that the levy notice creates a "custodial relationship between the person holding the property and the IRS"!

The employer must wait 21 days, then turn over the wages, or it can be held liable for the levy itself, including penalties and interest, as the Heli case proves. In Heli, the court found that even the company CEO's mental problems were not reasonable cause to remove the massive penalty.

This case shows that once a wage levy hits, your employer should be scared as hell that it does not ignore the notice and pay it on time! If the employer pays the employee instead of paying the delinquent employee's wages over to the IRS, the employer is on the hook with major penalties and interest to boot.

If your employer has received notice of a wage levy on you, there is still hope. You have essentially 21 days to put a collection alternative in place, i.e. a request for an installment agreement, offer in compromise, innocent spouse, currently not collectible status or bankruptcy to name a few. Call a local licensed attorney who will quote you a fixed fee (not a pay by the hour outfit) to move quickly and protect your interests. We offer such fixed fees for these situations, and we move fast. Call me today at 1-800-721-7054 to find out more.

Uptown Girl Christie Brinkley Newest Celebrity Tax Target

Wed, 07 Dec 2011 08:00:00 EST

TMZ has again broken the news on the newest celebrity facing IRS trouble. This time it is super-model Christie Brinkley. She owes $532,000 in back taxes, and has vowed to pay back every penny today. She blames a recently filed tax lien against her on sheer ignorance of the situation, her high-priced accountants, and the general ailing health of her elderly parents. There is no indication that her finances will prevent her from making today's payment as promised.

This story serves as another solemn reminder that Americans at all walks of life are subject to the strong arm of the IRS. Luckily for this celebrity, it appears that she will be able to pay her liabilities in full. Although Brinkley does not appear to be seeking any reduction in the amount she owes, the reasons she offered for not paying on time appear credible and would be legitimate bases to abate the massive penalties that have likely accrued against her debt. Watch my video for other legitimate reasons you may have experienced in failing to file or pay your taxes on time. The IRS calls these circumstances "reasonable cause" for forgiving penalties and the interest associated with those penalties, and the IRS rountinely approves about half of the requests.

Call me today at 1-800-721-7054 to discuss putting together your best arguments for "reasonable cause" to forgive those crippling penalties you have been dragging along.

New Year's Tax Resolution 2012

Tue, 06 Dec 2011 08:00:00 EST

“My own behavior baffles me. I find myself doing what I hate, and not doing what I really want to do!”- Saint Paul (Romans 7:15)

It’s Christmas time again, and 2012 is right around the corner. Have you paused a few moments and written your 2012 resolution yet? Notice, I said resolution, not resolutions plural.

I challenge every reader this new year to make 1 (and only 1) resolution on January 1. Why? Just think, if you made only 1 resolution each year for the last 10 years, and kept that annual resolution, you would have been 10 new behaviors, 10 new habits or 10 goals closer to a better life. Instead, many go about aimlessly with a list of unfocused wants that likely recur from year to year, only to be dashed into disappointment (or gluttony) by February 1.

What if one of those resolutions over the last 10 would have been to end your tax problem for good and get back on track with your taxes?

If you suffered through 2011 with the baggage of 1 or more years of tax problems hanging over your head, do not put it off any longer. Make ending your tax problem your 1 resolution in 2012.

I know all the usual reasons tax problem folks start with good intentions, but never end the problem: the IRS is scary; they don’t think they have money right now to offer the IRS anything close to what they would accept to settle the problem; tax help is too expensive; the penalties and interest continue to accrue so they will never see light at the end of the tunnel; or maybe the IRS will just go away on its own. In essence, all these concerns boil down to procrastination, a by-product of fear of the unknown.

However, the end of 2011 and the beginning of 2012 is the best time in years to resolve tax problems with laser intensity. We are in a recession/depression. There has been some recovery, but the IRS realizes that Americans are hurting financially. I have submitted offers in compromise, installment agreement requests and currently not collectible status requests this year for clients that I would have never dreamed would be approved in years’ past. They are going through because of relaxed programs like the Streamlined Offer in Compromise, set to expire in March, 2012. They are going through because many taxpayers have lost their jobs or their homes are being foreclosed upon. Even if these scenarios don’t describe your situation, you might as well take advantage of the general tone that IRS collections has taken lately: get the money that you can from taxpayers, while you can. This makes it even more important not to snooze or suffer through another year of tax problems, especially this one.

Call me today at 800-721-7054 and make an appointment to talk with me in person, so we can talk about getting control of your life again.

Oklahoma Legislature Makes Strides to End State Income Taxes

Mon, 05 Dec 2011 08:00:00 EST

The Republican-dominated Oklahoma Legislature is making enroads to ending the Oklahoma income tax. Republican Governor, Mary Fallin, has assigned a gubernatorial task force to research the gradual phase out of the income tax over the next 10 years. The task force is also charged with making the Oklahoma tax code leaner and easier to understand.

This would mean that state government would have to become more efficient, and we would have to find a new source of revenue. Income tax makes up about 30% of the State's revenue currently. The 9 states that have no income tax make up the difference by raising property taxes. Another possibility for raising revenue is by raising sales tax, but ours is already over the national average. Also, taxing spending always raises concerns that lower income families are unfairly impacted and it chills consumer spending (which hurts businesses, especially small business).

So, my prediction is higher property taxes. How high? Well, Texas has no income tax, and their property taxes are about twice as much as ours.

Is this a good idea? I think it is, and maybe the Feds will learn something about government efficiency from their state counterparts. Meanwhile, Oklahoma becomes a much friendlier place to do business. Problem is, if you don't pay your property taxes, surprise, you lose your property. State taxes are alot less than IRS taxes. The legislature has just upped the ante and put more of your skin in the game to pay your Oklahoma taxes in full, on time. What do you think?

If you are receiving threatening mail or liens from the Oklahoma Tax Commission for delinquent income taxes, you have options. Call us today at 405-607-1192 to discuss them.

The Gambler's Quick Reference Guide to Taxes and the IRS

Thu, 01 Dec 2011 08:00:00 EST

I get alot of questions about gambling and the IRS, especially around bowl season, so I thought a quick reference guide would be helpful.

1. The wager must be legal. This seems like a no-brainer, but you would be surprised.

2. Gambling winnings are taxable income, and you must report them, period. This includes winnings from lotteries, horse and dog races and casinos and the fair market value of prizes are all taxable by the IRS. The rules are somewhat complicated, but the casino will keep you honest by issuing you a W2-G if you make more than $1,200 in slots, $1,500 in Keno, $5,000 in a poker tournament or the payout on some other wager exceeds $600 and is more than 300 times that wager. They may even withhold some of your winnings meet this criteria.

3. You may deduct gambling losses if you itemize, but they may not exceed gambling winnings. I had a buddy in college that kept all his losing tickets, but he never had any winnings. Sorry, doesn't work.

4. Keep a journal and your receipts on winnings and losses if you do any significant volume of gambling. You really will need a written record to make a case for your offsetting losses if you are ever audited.

These are only a summary of broader rules, but you get the picture. If you are facing an audit where gambling winnings are at issue, or your gambling has caused a shortfall in your ability to pay your taxes, call locally licensed tax lawyer, Travis Watkins, at 1-800-721-7054 today. I have helped many just like you put their finances back together from these shortfalls.

Hot IRS Audit Topics for 2011 and 2012

Wed, 30 Nov 2011 08:00:00 EST

Here are the hot topics and trends for tax audits right now for individual taxpayers: home energy credits and deduction of state sales taxes on vehicles purhcased in 2010.

The IRS found 100,000 erroneous home energy credits. Individuals were entitled to deduct up to $1,500 on energy saving home improvements in 2009 and 2010 combined. Many taxpayers reported credits exceeding $1,500 and the most egregious offenders may face audits in the near future.

Also, individual taxpayers were entitled to deduct sales tax on vehicles purchased in 2009 (up to $49,500), if they also deducted state income taxes. However, many taxpayers erroneously made deductions for sales taxes paid on vehicles they purchased in 2010. This is a no-no, and this error may be a hot basis for audits in the near future as well.

If you find yourself the target of an IRS audit, get professional help. The dangers of the IRS bootstrapping one audit year into 2 or 3 years is too great. Get help from a professional who deals with audits and collection matters daily. Call me at 405-607-1192. I would love to help you out!

IRS Announces Enhancement of Electronic Snooping Techniques-The Metadata Summons

Tue, 29 Nov 2011 08:00:00 EST

In IRS Chief Counsel Advice No. 201146017, issued November 18, 2011, the IRS has announced that a field examiner may issue a summons to a taxpayer (or a third-party--more on that later) for original electronic data files to obtain metadata concerning taxpayer records. The IRS now has this right, even if the taxpayer opts to offer up paper documents instead.

So, what is metadata anyway? Under the IRS' Chief Counsel's definition, metadata is just about anything electronic. Specifically, it is "information that describes how, when and by whom a particular item or set of electronic information was collected, created, accessed, modified or formatted." The IRS' power to compel production of metadata is limited only by the vague guidance of I.R.C. Section 7602(a)(2), which allows production requests of virtually anything that "may be relevant . . . to a proper purpose for which the examination is being conducted, such as ascertaining the correctness of the return."

Coincidentally, the IRS' announcement comes almost simultaneously with the IRS' mandate that many taxpayers must file their returns electronically. Virtually every tax preparer must file returns electronically by tax year 2012. The Chief Counsel has made clear that the summons may be issued to third-parties. A taxpayer's accountant is specifically mentioned as one of these third-parties to whom the IRS may issue the summons.

The concerns here are apparent. Metadata is a trail of all the activities that went into preparation of tax documents, good or bad. Historically, the IRS' blasts into the age of electronic age have been lack-luster. Though, the possibility of IRS abuse here remains high. However, an argument can be made that certain electronic data is privileged from production if it is directly related to attorney advice on a legal issue. Your communications with your accountant and enrolled agent do not enjoy such privileges. Moral of the story: step back in a time machine to an era of exclusively paper records, or hire a local, licensed lawyer to provide you advice on your accounting issues.

Corporate Tax Audits Are Increasing on Federal and State Levels

Mon, 28 Nov 2011 08:00:00 EST

Kiplinger's has conducted a recent tax survey of corporate tax executives. It found that nearly 60% of the participants reported an increase in IRS audit activity, and about a 1/3 increase in state audit activity. There can be no doubt that these trends will continue, as news reveals more and more governmental budget shortfalls on both local and national levels.

If you are in the Oklahoma City or Tulsa area, and you find yourself the target of one of an IRS or Oklahoma Tax Commission audit, don't panic! There are several different types of audits with varying levels of scrutiny and paperwork production. You should call a local lawyer with experience in tax disputes and audits to assist you. Make sure that any professional you hire has a working relationship with IRS auditors on a day-to-day basis.

Often a tax lawyer can buy you more time to produce important documentation, and guide you through the pitfalls of the process. Most auditors have marching orders to focus on just a few areas. The auditors want to analyze those areas and move on. Many taxpayers who go it alone run the risk of saying too much and opening up more tax years for the audit. Call Travis Watkins at 405-607-1192 today if you have received notice that you are being audited. We handle IRS and Oklahoma Tax Commission audits for many of our clients.

The Heirs of Steve Jobs Could Face Nearly a Billion in Capital Gains Tax

Sat, 26 Nov 2011 08:00:00 EST

Steve Jobs had a lot of stock when he died last month-- $6.78 billion in Apple and Disney stock, to be exact. Lots of stock means lots of capital gains. Had Jobs sold the stock the day before his death, for example, he would have faced a tax bill over $850 million!

Capital gains are set to rise from 15% to 20% in 2013, along with a levy of 3.8% on unearned gains for the wealthy. When Jobs' wife dies or money is given away from the Estate, the money is also subject to a 35% estate tax. However, the stocks are in trusts, and a trust administrator can currently sell the stock which is only taxed on the appreciation since Jobs' death and not on his whole investment. Since Jobs' death, the taxable appreciation was a meager $330 million! So, the Jobs will likely sell the stock to avoid the growing gains and resulting enormous tax bill. That is, if there is a market for that volume of stock.

Perhaps Warren Buffett can snatch up some more of these stocks and beg the IRS to tax him and his fat cat friends a little more. Regardless, the Jobs are wise to consider dumping the stocks for the substantial tax relief.

Snipes Can't Catch a Break

Fri, 25 Nov 2011 08:00:00 EST

Few celebrity tax cheats are more fun to write about than Wesley Snipes, and he never disappoints when it comes to high profile tax disputes. TMZ reports that Blade just can't seem to catch a break. It appears that Snipes not only did not pay Uncle Sugar, he failed to pay his AmEx bill of $30,000 before he went to the can.

Snipes is currently serving time in a federal penitentiary until 2013 for tax evasion and refusing to file tax returns for millions of dollars of income. TMZ features a throwback AmEx commercial with Snipes as Willie Mayes Hayes from Major League that cannot be missed. His slogan "don't steal home without it" is irony at its best. P.S. Don't be this guy. P.P.S. your other creditors take a back seat to the IRS, but few of them go away (even if you are in jail).

Don't Be A Turkey This Thanksgiving!

Thu, 24 Nov 2011 08:00:00 EST

You put a lot of effort into that Thanksgiving Day meal. You research recipes, develop a systematic plan, and then you execute the plan. You get in there, and get your hands dirty. Gizzards gross you out, but you know it will be all worth it in the end. Then, when all of your work is done, you can sit down and enjoy your Thanksgiving Dinner.

The same holds true with your tax problem! You need to handle it like you do Thanksgiving Dinner. Do your research, develop a plan, and then execute the plan…don’t be afraid to get your hands dirty! Don’t just sit there and do nothing…the Turkey ain’t gonna cook itself!

Our clients understand this. They did their research and hired us! We develop and execute the plan for them- so they don’t have to. We have the recipe for tax problem success…

So don’t be a turkey this Thanksgiving. Contact us today. You will be thankful you did!

Christmas Tree Tax Season

Thu, 17 Nov 2011 08:00:00 EST

The Obama administration has backed away from a proposed fee on Christmas trees, after critics called the measure a Christmas tax and Obama the Grinch who stole Christmas.

The White House denied claims that this was a tax on Christmas. The measure, set to go in effect last week, was touted as a 15 Cents per tree self-imposed assessment among producers and importers of fresh Christmas trees.

Supporters say that the industry assessment was meant to raise money for advertising campaigns to support natural Christmas tree producers, which have fallen behind in sales in recent years to artificial tree producers. In this regard, it would be no different from the "Got Milk" campaign for the dairy industry or the "Beef, it's what's for dinner" campaign for beef producers.

Nonetheless, the public shaming from the incident has resulted in retreat for supporters of the measure. The White House says that the USDA has pulled the measure to be "revisited" at a later time (maybe a less conspicuous time of year--like Arbor Day?).

Christmas Tree, How Will O Tax Thee?

This story would be laughable, if it wasn't so damned scary. What are the chances that this "assessment" does not trickle down to the consumer? Once again, the powers that be have attempted to curtail our behavior through the power of the tax. This feel-good measure is supposed to promote U.S. jobs, maybe, under the ruse that plastic trees come mainly from China? (I received this message when I tried to check the stats for this hypothesis online-"Thank you for visiting Made-in-China.com! Your access to Made-in-China.com has been temporarily denied."). Maybe, our fiendish enjoyment of plastic trees is somehow worse for the environment than, say, cutting down fresh trees? Idunno...

Anyway, I am opening the electronic lines for your free suggestions for the struggling fresh tree industry's new slogan. Best slogan gets $100 off their 2012 tax return preparation. Good luck! P.S. "Got Wood?" and "Don't Tax Me Bro" are already taken.

Is it a Good Idea for the IRS to Prepare Your Return For You?

Wed, 16 Nov 2011 08:00:00 EST

Fox News has reported that Democratic Congressional committee members have proposed a new plan for the IRS to prepare your tax return for you. Supposedly, this is going to save taxpayers millions in lost productivity for the hours it takes to fill out their overly complicated tax returns. If you have no itemized deductions, you would be a candidate! Apparently, President Obama, himself, supports this proposal. The idea has not made its way out of committee yet.

Guess what? The IRS already does this for you without Congressional approval. Without the happy-face :) that Congress would like to spray-paint on this procedure, it's called the Substitute for Return, or "SFR." If you have not filed in a few years, the IRS already prepares returns for you based on information that third parties involuntarily file on you (W-2's, 1099's, etc.). Typically, these are the most Draconian returns you could ever think of filing for yourself.

Hopefully, for our sake, the SFR Department does not become the "new" save-lazy taxpayers millions-while looking out for their best interest-Department. Rep. Sam Johnson, R-Texas nailed it, "[a]llowing the IRS to file your tax return is like asking the fox to guard the hen house."

--"I'm only here to help. Now, who's next," said the "new"
IRS tax prep agent.

This is a bad (and far from a new) idea any way you slice it.

IRS May Experience Budget Cuts

Tue, 08 Nov 2011 08:00:00 EST

The House and Senate have announced proposals to cut the IRS' budget in 2012 by at least $500 million. The IRS says that these deep cuts will result in slower service and cut the country's revenues by $4 billion. Experts say that budget cuts will be less drastic in their final form, when they get out of committee. However, the IRS is going to have to make do with less.

I think it is only fitting that the IRS cut back when many in Oklahoma and throughout the US are hurting financially. This Summer, the IRS announced a new program to streamline the offer in compromise program, for instance. This new program, coupled with budget cuts across the board at the Agency, may mean that offers and other collection alternatives will receive less scrutiny. The IRS just simply won't have the time to deeply analyze each case. This is good news any way you cut it.

So, now is the time to get serious about the old tax liabilities that have been keeping you up at night in 2011. The best time to cut a deal for your tax problem or get collection activity off your back is when things are at their financially bleakest. Call me at 405-607-1192 and we'll get started getting your life back!

Oklahoma Earthquake Victims May Be Able to Deduct Property Loss on Their Federal Tax Return

Mon, 07 Nov 2011 08:00:00 EST

Earthquakes ripped through Oklahoma on Saturday, causing property damage to many in the Shawnee and Prague areas. Luckily, no severe bodily injuries were reported.

Unfortunately, many are awakened this morning by another shocking reality. Many homeowners believe incorrectly that they are covered by insurance for damages arising out of earthquakes and other natural disasters. However, most homeowner's insurance does not pay for common geological processes including floods, hurricanes and earthquakes.

The good news is that you may generally deduct casualty losses relating to your home, household items and vehicles on your Federal tax return if the loss is not covered by insurance. If loss occurred to personal-use property or is not completely destroyed, you may deduct the lesser of the adjusted basis of your property or the decrease in fair market value of your property. The deductions are made on Form 4684-A for individuals and 4684-B for businesses.
Call us at 405-607-1192 to navigate you through the nuances of these deductions.

All About Audits!

Sat, 05 Nov 2011 08:00:00 EST

It seems lately I have gotten more calls about individuals and businesses being audited by the IRS. It is also plastered all over IRS publications and tax professional websites that the IRS is increasing the number of audits conducted across the board for individuals and businesses alike. In fact, I have done several articles about this. One of my articles is about the IRS claiming to do more audits on Tanning Salons. Another article is about the IRS auditing additional years following the completion of an audit for an alternate year. My latest article highlights the IRS wanting to increase audits on recipients of personal injury settlements. It is also important to mention that the IRS likes to audit people who take the home-office deduction. Make sure if you take that deduction, you meet the strict criteria.

Oklahoma, to prevent being audited, be sure you have a qualified tax professional who keeps up to date on all changes to the tax code. Lastly, keep all tax records that for at least 3 years. If you are self-employed, you should keep them for about 7 years. You will need this if you get audited. With the economy in a recession, I expect audits will continue to increase as the IRS tries to compensate for the deficit.

Deducting Fees from Personal Injury Settlements

Fri, 04 Nov 2011 08:00:00 EST

In my article,Part II Analysis of Tax Consequences From Personal Injury Settlements, I explain the IRS code with regard to deducting attorney fees from personal injury settlements. Basically, the IRS will allow legal fees as deductions so long as the personal injury income is deemed taxable. This makes sense. The IRS will allow you to deduct attorney fees so long as it is directly related to the taxable income. Much like on a schedule C...if a business uses a professional or legal consultant which is directly related to the benefit of the business, it can be deducted. Conversely, it would not make much sense to deduct fees from income that is not "taxable" or included in gross income. Refer to my article linked above for more details on taking the deduction from a personal injury settlement.

Oklahoma Tanning Salons Feel the Burn from IRS Audits

Mon, 31 Oct 2011 08:00:00 EST

Last year, the Feds tacked on a 10% excise tax to all tax salon outfits, including Oklahoma- owned salons. This consumption tax was supposedly to save us from our cancerous ways.

Not all lawmakers are pleased...of course.

Always willing to tell on itself if it results in more audits, the IRS has reported that fewer excise tax returns were filed than expected this year from salon owners. So, not surprisingly, the IRS has unleashed a special set of examiners and auditors to conduct field audits of tanning outfits to collect the tax or figure out what went wrong with these past due taxes.

If you have been visited by a Revenue Officer or received some threatening mail about an audit or other collection matter, call local licensed lawyerTravis Watkins and schedule an appointment.

Travis Watkins Joins American Society of Tax Problem Solvers

Sun, 30 Oct 2011 08:00:00 EST

The American Society of Tax Problem Solvers (ASTPS) is a Washington D.C. non-profit organization committed to providing its members with resources that will assure their ability to provide taxpayers with competent representation before the IRS and other taxing authorities. To accomplish this mission, the ASTPS....

Provides bona fide qualifications for Certified Tax Resolution Specialists through administration of the Certified Tax Resolution Specialist Examination.

Sets high standard for admission, including demonstrated competence through mandatory continuing professional education.

Requires ASTPS Members to adhere to a strict code of professional conduct and ethics.

Serves as the national representative for ASTPS Members to business, government and academic institutions.

Provides leadership to inspire public confidence in the integrity, objectivity, and professionalism of ASTPS Members.

Secrets revealed to calculating your own Offer in Compromise.

Sat, 29 Oct 2011 08:00:00 EST

People are always asking me, how do I know what number to list as my Offer in Compromise (OIC) to the IRS? Read my article, How to Calculate and Pay an Offer in Compromise. There are only 3 methods of paying an OIC: Cash offer, Short-term deferred offer and Long-term deferred offer. Call me today to figure out which method is right for you.

Remember, all offers require a $150 filing fee and some types require 20% of the offer amount down in advance (unless waived by the IRS).

The acceptance rate is not great for first time offers. More likely than not, you will need to appeal the offer results at least once. Appeals have a good acceptance rate, if they are good offers. Do yourself a favor and get some guidance from a professional who deals routinely with the OIC appeals process everyday. You will be glad you did.

IRS Vows to Do Better (Auditing Additional Years of Your Income)

Wed, 19 Oct 2011 08:00:00 EST

In response to recent U.S. Treasury inspector concerns, the IRS says that it will do a better job in its audits. What the IRS means is, they will try to open up as many years as they can (the statute of limitiations is 6 years if the IRS meets certain criteria) with each audit that shows that income was either understated or deductions were overstated or both in the return.

What does this mean to you? If you are the unfortunate target of an IRS audit (whether by random chance or other criteria), and they find such reporting errors, it is more likely than ever that the IRS will open the additional years to find more common reporting errors. Statistics show that the IRS has been typically skating close to its statute of limitations on its audits (which carry a 3 year statute of limitations). These limitations periods do not apply if the IRS determines that the return is fraudulent.

For more information on the statute of limitations and preparing for an audit, see our FAQ section on this topic.

Chris Tucker faces IRS Rush Hour

Mon, 17 Oct 2011 08:00:00 EST

Over the summer, celebrity tattler TMZ, was following the tax woes of Rush Hour funny-man, Chris Tucker. According to the L.A. County Recorders Office, the IRS filed an $11.5 million Federal Tax Lien against Tucker for unpaid income tax back in July, 2010. This Federal Tax Lien is in addition to a state of California tax lien for income taxes to the tune of $3.5 million. Note to California: remove your state system from poverty levels by enforcement of existing celebrity tax debt!

The $11.5 million tax liability secured by the Federal Tax Lien breaks down like this:

2001--$4,007,794
2002--$5,060,074
2004--$55,544
2005--$660,414
2006--$1,788,080

In 2001, Tucker was paid over $20 million for Rush Hour 2. In 2006, Tucker was paid $25 million for Rush Hour 3.

Not surprisingly, this news corresponds to recent developments in Tucker's real estate portfolio. Tucker is selling for $2 million an 8,861 square foot home in a posh suburb of Orlando, which he purchased for $6 million three years ago. He owns other properties in California as well. It is unclear if he intends to dump some of this property to settle his tax debt as well.

Cain's 9-9-9 tax plan: panacea or slippery slope?

Thu, 13 Oct 2011 08:00:00 EST

Former pizza exec, Herman Cain, sounds like the end of the Beatle's White Album (#9, #9, #9...). Anyway, Cain has his 9-9-9 tax plan to thank for recent polling popularity. Undoubtedly, the Republican presidential hopeful has struck a chord with Americans that may resonate to the voting booth. His 9-9-9 plan (a 9% tax rate across the board on income, sales and corporate payroll) is touted as the panacea for the complexity of the tax code.

As with any mention of fair or flat tax, the critics go wild that the poor will be disproportionately penalized with any type of a consumption tax, even one that runs side by side with income taxes. The purchase of consumer items is always going to pain low income folks in the wallet worse than Donald Trump. The price of consumer goods stays the same for everyone, regardless of your income level.

But, let's face it. The money saved in paperwork (tax preparation) and enforcement (i.e. IRS collection efforts to chase down tax debt) goes down. The only problem is that the beast is always hungry and must be fed. I hate slippery slopes, but how long before 9-9-9 becomes 10-10-10 or 33-33-33? Those aren't very catchy numbers for your album (or your portfolio either).

A Tax Lawyer's Secrets to Dealing with the Oklahoma Tax Commission Part I

Wed, 05 Oct 2011 08:00:00 EST

Many people call my office scared stiff after receiving threatening letters from the Oklahoma Tax Commission. One of the most common fears is when a person receives a "Notice of Tax Warrant." What a frightening thing to read! But never fear; while the term, "warrant" may sound like there is a warrant out for your arrest, it is actually just a tax lien. This is no different than the IRS' Notice of Tax Lien... it is simply making a legal claim to any assets that you own, so should you try and sell them, they can take the proceeds. There are no immediate repurcussions other than a lowered credit score. Believe me, a Tax Warrant does not mean you are going to jail. When I tell my clients that, the relief on their faces is priceless! But how do you get rid of a Tax Warrant?

That is what I am here for. I know the steps to take and when. Typically, I attack the OTC problem after I have negotiated a resolution with the big guys....the IRS. However, certain situations warrant (no pun intended) immediate action with the OTC. If you owe the Oklahoma Tax Commission, call my office for a free tax consultation today! My experienced staff is standing by waiting to help you. What have you got to lose?

Tax Help for the Unemployed Part II: The Positive Effects of Job Loss on Taxes

Tue, 04 Oct 2011 08:00:00 EST

Despite the negative effects that job loss can have on a tax situation, there are some positives that can help offset a tough situation. While actively looking for new employment, so long as it is in a previous trade or business, a taxpayer may deduct related expenses while conducting a job search. For example, a taxpayer may deduct the costs of mailing a resume to a potential employer, the cost of professional help in completing a resume, or employment agency fees. Also potentially deductible are travel expenses, so long as the potential job is in a present trade or profession. These expenses may not seem like much, but when it comes to taxes, every little bit helps.

Tax Help for the Unemployed: The Effects of Job Loss on Taxes

Mon, 03 Oct 2011 08:00:00 EST

In this economy, job loss and unemployment hit close to home for many- especially in Oklahoma. That loss of income can create a hardship on a taxpayer, potentially resulting in a tax problem. It can also create even more of a hardship on a taxpayer that already has a tax problem. Today I am going to explain what to do if either one of these situations apply to you.

Many people who have lost their job seek unemployment benefits. While this is helpful in the short-term, if employment is not obtained within a certain amount of time, the benefits cease...and no matter what- any unemployment benefits received are taxable. This can put a taxpayer in a tough situation: how is an unemployed person to pay taxes on unemployment income? This is another one of the many IRS laws that does not make much sense. The best thing to do is file your return. Even if you can't pay what is owed. You should seek out a local, licensed, lawyer while times are tough. A licensed professional who deals with IRS collection on a daily basis should be able to keep the IRS at bay until you get on your feet again.

Another common scenario is when a person already owes back taxes and then loses their job. If on a payment plan with the IRS, this can create some serious issues as he will likely default on the installment agreement due to a financial inability to pay. When an installment agreement is defaulted, the IRS collection computers will send the taxpayer a Notice of Intent to Levy. These computers do not care if you lose your job, nor do many employees at the IRS care for that matter...they just want their money. If you have defaulted on an installment agreement, you should seek a tax professional's help immediately. You need a tax professional experienced in IRS collection representation, as many proclaimed tax professionals only prepare returns and are not familiar with IRS collection laws (two different ball games).

All You Ever Wanted to Know... and More about Estimated Taxes Part II

Sat, 01 Oct 2011 08:00:00 EST

Many people who are self-employed do not realize how estimated payments work, or may not even know they need to be paying them in each quarter. If you read my article on Part I and thought, oh, I will just pay my taxes when I file my return...that is how people end up coming to see me. They truly intend to pay their taxes, and think it is just easier to just do it all at once. Okay, that may work for some, but for many that is exactly the mind-set that gets people into tax troubles...

I have seen it time and time again...you plan on that one completed job paying-out right around the time taxes are due, and then that falls through...(probably because they have taxes due, too) so now you don't pay your taxes. You never set any money aside...you never planned on this happening...so much for paying when you file! Oftentimes when people don't have the money to pay their taxes when the taxes are due, people don't file at all! That's the worst thing you could do; but that is another story...

Did you know that even though you may fully intend to pay your taxes when you file your 1040 tax return, you are actually charged a penalty for not pre-paying the tax? That's right; if the IRS thinks you need to be paying in quarterly, and you don't pay in, they hit you with another one of their many penalties. Just another reason why it is best to make quarterly payments instead of waiting until April 15^th!

Now, I'm not here to scold you or badger you for not paying estimated payments if you are self-employed. I'm here to help and I take pride in sharing with the public helpful information which the IRS may have neglected to share. Call me today for a free tax consultation. What have you got to lose?

McDonalds Monopoly 2011 Winner May Face Lots of Taxes

Wed, 28 Sep 2011 08:00:00 EST

It's that time again...McDonalds Monopoly is back. Imagine getting the winning piece on McDonald's large fries. You already have Park Place and you just peeled off Boardwalk- you have just won 1 million dollars! Before you quit your day job and go max out your credit cards, you should be planning out how you are going to satisfy Uncle Sam. You know he is going want a piece of that pie!

The McDonalds Monopoly grand prize of $1 million is paid out in annuities. The winner gets $50,000 a year for 20 years with no interest. A good portion of that should go over to Uncle Sam. In fact, winnings such as this would be taxed at about 25% at the Federal level, and if you live in Oklahoma, the rate is 4%. Therefore, you are looking at about 29% taxes! This leaves a person roughly $35,500 a year for 20 years.

What if you collect all green pieces and win the Nissan instead? I hate to break the bad news, but it's not a free car...it comes with a price. You still have to report that on your tax return and the car will be taxed at the fair market value. Many people get into tax problems after winning a car, a vacation, or other non-cash prizes as they cannot pay over the tax on their winnings from their winnings.

The best thing to do after winning a prize at McDonalds Monopoly is to immediately consult your tax professional. They can advise you how to proceed so that Uncle Sam will not be knocking at your door.

A Tax Lawyer's Solution to Substitue for Returns

Mon, 26 Sep 2011 08:00:00 EST

As explained in my article, when a taxpayer has unfiled returns, the IRS will file them in replacement....which is called an SFR, or Substitute for Return. The IRS will put the taxpayer in the worst possible tax bracket by only giving the standard deduction and minimum exemptions. Then add on penalties for not filing on time, paying on time, and other miscellaneous penalties plus interest and the tax liability can get out of hand quickly!

There are a couple of different ways to know if an SFR has been filed. First, a tax professional can discern if an SFR has been filed by looking at IRS collection letters. At the top of the letter the tax type is stated, and oftentimes, the IRS will call an SFR a form "1040A". This method is not 100% and may get confusing as 1040A also refers to a simplified version of the 1040 tax return. A 1040A is one step up from a 1040EZ and one step down from a straight 1040 in complexity. The other way to know is a qualified tax professional can order your transcripts and can then determine if an SFR has been filed by looking at the account history. This is the best way to find out for sure.

If you have unfiled returns, you need a qualified tax professional to protest the SFRs. You need someone who deals with the IRS on a daily basis, in order to help you get back on the right path. Seek help immediately.

OKC Tax Lawyer Explains Drugs, Taxes, and Criminal Charges

Wed, 21 Sep 2011 08:00:00 EST

There may be laws for reporting income from selling drugs, and marijuana sellers, medicinal or not, may be jilted by not being able to deduct costs, but I highly doubt that someone involved in such activities would abide by the income reporting laws anyway. Legally they should, but reporting income from drugs is also an admission of a drug crime. It's kind of a catch-22. Not only would they need a qualified tax lawyer for representing them on the tax side, they would also need a qualified criminal attorney for representing them on the criminal side as they could face criminal charges for possession and distribution.

Hiring the Wrong Tax Professional May Cost You...Alot

Fri, 16 Sep 2011 08:00:00 EST

I have a few cases right now that owe about 2.5 million dollars in back taxes combined. And what do these cases have in common? They are all self-employed business owners that initially hired the wrong professional to handle their tax matters. These supposed "tax professionals" in some instances, filed frivolous returns, embezzled money, and failed to incorporate my clients' corporations correctly, costing them hundreds of thousands of dollars in back taxes, various penalties and interest. This creates one whopper of a tax problem for me to unravel.

Business owners should have a qualified tax professional handle their books, records, and tax returns. If done incorrectly, they could be in for a big, expensive mess like my clients mentioned above. So what can a consumer like you do to protect yourself? Here are some helpful things to remember:

1. Always do your research. Check out these outfits or individuals on the Better Business Bureau website before hiring them
2. Meet with them in person, and check out their credentials
3. Get more than one opinion
4. If something sounds too good to be true, it probably is. Be wary of accountants who promise large refunds or who say you can deduct everything
5. Get referrals from trusted colleagues

1040 Tax Return Extension Deadline Approaching

Thu, 15 Sep 2011 08:00:00 EST

Today is September 15th. If you have a tax extension to file your 2010 1040, your time is almost up. You only have until October 17th to file! If you have not already begun to gather your information to take to your tax professional, now is the time to do so.

Many people have the misunderstanding that an extension of time to file, is an extension of time to pay. Wrong. If you are going to owe, and you file an extension, you may be charged interest on the unpaid tax and you may also face late penalties.

Innocent Spouse Relief Expanded

Wed, 14 Sep 2011 08:00:00 EST

Taxpayers and lawmakers have complained that it is unfair for the IRS to limit taxpayer requests for innocent spouse relief to 2 years. Previously, an innocent spouse could only go back 2 years from the date the IRS started its collection efforts to request equitable innocent spouse relief. So, the time one spouse could conceal the IRS' collection activites worked against the innocent spouse.

Bowing to concerns, the IRS has officially lifted the 2 year ban on innocent spouse relief requests and will apply these changes retroactively to pending requests and previous denials based on the limitation. An previously denied innocent spouse must re-submit the proper forms for the request. Call a qualified, local tax professional to assist you with this.

Part II, IRS Challenges to Independent Contractor Classifications

Mon, 12 Sep 2011 08:00:00 EST

Today, we are building upon our recent blog discussion of payroll taxes and employer classification of workers as indendent contractors. As a general rule, the IRS cannot challenge an employer's classification so long as the company files timely 1099's and has a reasonable basis (ie. not cooked up after the fact) for the classification. There have been recent ruminations from legislators that they are attempting to phase out employer reliance on industry standards (i.e. our industry has always thought of its workers as independent contractors) as a reasonable basis for calling workers independent contractors, but those efforts may be stalled in the water for now.

Not to be outdone or delayed by lawmakers, the IRS plans to conduct exams of business compliance with independent contractor classifications. Certain studies employed by the IRS show that employer misclassification is a contributing factor to the massive tax gap (that number that the IRS believes should be paid vs. what taxpayers are actually paying). They will also be reaching out to workers whom the IRS believes to be misclassified to question them about their status as contractors.

I can tell you that we have seen a disproportionate number of these classification issues coming in to our office from business owners who have been contacted by revenue officers in the field. As discussed in my previous blog post, if you are a small business that hires most of its work out through independent contract, this issue is best to tackle head-on before you are contacted by the IRS. Business owners can take action now to build up a file on their rationale for classifying workers as independent contractors before being hit with payroll taxes, penalties and interest for their independent contractors.

Can the IRS Challenge Your Company's Classification of Independent Contractors

Sun, 11 Sep 2011 08:00:00 EST

Since laws enacted in 1978, the IRS cannot re-classify your business' independent contractors as employees for purposes of determining whether you must withhold for payroll tax purposes. This is the case so long as you file timely 1099's on these workers and have a "reasonable basis" for your classification.

So, what constitutes a reasonable basis? Well, so long as it includes reliance on a prior court ruling, IRS directive or industry standard, the IRS must (not may) accept your designation and cannot challenge it. Here's the key: you must have known your reasoning before making your designation. In other words, it pays to know why you are classifying your worker as an independent contractor before the IRS asks you why you are not paying payroll taxes.

Call me if you need help with this. As you can imagine, you will be under a great deal of scrutiny if you are scrambling around without a plan for how to handle these IRS questions. We can also help you file timely 1099's for your independent contractors, which is the litmus test of credibility for backing up your worker classifications.

IRS Reduces Interest on Overdue Taxes

Sat, 10 Sep 2011 08:00:00 EST

The IRS has reduced interest due on past due tax liaibility a full percentage point, from 4% to 3% for individuals. Businesses owing more than $100,000 will be charged at a 5% interest rate, beginning September 30, 2011. Unfortunately, interest on refunds will fall by the same percentage point for individuals and 2% to corporations. Refunds for corporations in excess of $10,000 will earn interest at 0.5%.

Trust Fund Recovery Penalties for Preferential Payments to Creditors

Fri, 09 Sep 2011 08:00:00 EST

In Newbill v. U.S., (4th Cir), a construction company ran into financial problems and its creditors assumed joint control of company assets under a surety agreement. The construction company set aside payroll taxes, and the CEO was aware that its creditors were using the withholdings to pay company debts instead of the IRS. Despite his knowledge of these facts, the CEO co-signed the company checks anyway with the creditors. He argued that he did not have unilateral authority to sign checks and basically went along with the way the creditors directed the checks to be issued. The company went out of business and instituted bankruptcy proceedings.

The 4th Circuit Court of Appeals upheld the IRS' assessment of the trust fund recovery penalty against the CEO personally to the tune of about $100,000 because he was a "responsible person," under the meaning of the tax code, who wilfully failed to pay the IRS payroll withholdings. The CEO should have used all unencumbered coporate funds to pay the IRS. While the CEO did not have unilateral authority to issue checks, neither did the creditor. The court held that the CEO should have withheld his signature from the checks in protest to these preferential payments to non-governmental creditors. It is unclear from the facts of the case whether the creditor was also assessed trust fund penalties. To remember how "the IRS" thinks about your money, simply take out the space between the two words. When you face tax problems, unencumbered funds are always "theIRS."

Another Solution for Meeting IRS Deadlines

Thu, 08 Sep 2011 08:00:00 EST

It was recently announced that Post-Office hours will be decreased. So what do you do if you have a deadline with the IRS and can't fit the Post-Office in to your busy schedule? Well, the IRS just released that they will accept timely use of private services such as DHL or Federal Express as evidence of timely delivery. Their hours are a little bit more flexible for working folks. Just be sure and get the tracking number. This will help you avoid late penalties.

Don't Trust IRS Agent Advice on Penalties and Interest

Wed, 07 Sep 2011 08:00:00 EST

I often tell clients that one arm of the IRS does not know what the other arm is doing. Look, the tax codes are tough and they are changing everyday. Don't expect the agency itself to know its own rules and procedures.

Here is a case in point. In Estate of Telesmanich, TC Memo. 2011-181, the executor of an estate in Croatia called the IRS seeking advice concerning the U.S. income tax interest implications of long delays in the Croatian probate systems. The IRS Agent said essentially no big deal, send in the money with a written explanation of the cause of the delay, and interest would be abated (removed). The executor followed this advice. Well, the folks at the IRS responsible for tax assessment saw things a different way. The IRS tacked on the interest anyway and did not remove it.

The Tax Court ruled in the IRS' favor on the tax controversy because it found that the delay, overdue tax and resulting interest was not the result of the Agent's bad advice. So, moral of the story is that 2 things are certain: death and taxes, not IRS advice. Clearly, the IRS is sometimes wrong about its own procedures and programs. Call a qualified tax professional for help with penalty and resulting interset abatement.

Travis W. Watkins P.C. Opens Tulsa Office

Thu, 01 Sep 2011 08:00:00 EST

You asked, and we listened. I am proud to announce the Law Offices of Travis W. Watkins, P.C., will open its Tulsa office on September 12, 2011, to better serve your needs. This means that the great service you know and expect from Oklahoma City Tax Lawyer, Travis Watkins, will be conveniently located to serve our Tulsa-area clientele as well. Call for a consultation today at 918-877-2794. The office is located east of Riverside Parkway at 1831 E. 71st Street, Tulsa, Oklahoma 74136 (the Southbridge Office Park-the HQ Building).

JaMarcus Russell Tax Problems

Tue, 30 Aug 2011 08:00:00 EST

Former NFL No. 1 draft pick and Oakland Raider, JaMarcus Russell, is out of the NFL but he is paying his debts TMZ reports.

His $2.4 million house in Oakland is in foreclosure, but Russell has just paid off in excess of $220,000 in property tax liens with the State of California.

Russell signed with the Raiders in 2007 for $61 million with $32 million guaranteed. He finished a disappointing 7-18 as a starter and was released by the Raiders in 2010. Russell is returning to complete his bachelor's degree at LSU this fall.

JaMarcus Russell has not garnered much media support for paying off his taxes, but the State of California could certainly use the money I'm sure...

Oklahoma Tax Incentives and Credits

Mon, 29 Aug 2011 08:00:00 EST

Most Oklahomans agree that Oklahoma businesses should receive tax incentives that have the effect of helping Oklahoma. Most are up in arms, though, when it comes to allowing these businesses to sell left over credits to individual taxpayers and investors who have nothing to do with the purpose of the incentive itself.

For instance, many agree that coal and wind power and construction of energy efficient homes should be encouraged, and that businesses should be rewarded for utilizing these systems. However, when it comes to transferability of these credits, it sounds eerily like cap and trade. An Oklahoma legislative task force is studying these incentives and the negative effects they have on Oklahoma's budget. Are the perceived long term benefits worth the revenue shortfall?

Class Warfare on the Rise

Tue, 23 Aug 2011 08:00:00 EST

Two very different narratives are being presented right now to the American public. The left says that the rich are to shoulder the majority of taxes to fund government programs. The right says that taxes should not be raised, but people who are not paying taxes should pay. Either way, it looks like taxes are going up. Who is going to pay?

Streamlined Offer in Compromise Program

Mon, 22 Aug 2011 08:00:00 EST

In response to these tough economic times, the IRS has added a new Streamlined Offer in Compromise process. The program is meant to generate government revenue while making it easier for the taxpayer to settle tax debt for less. If you make less than $100,000 as a household and your tax debt is less than $50,000, your offer may be subject to lesser scrutiny than other offers. Presumably, this means that more taxpayers will be approved to settle taxes for less. Only time will tell if that is truly the case.