The government’s proposed healthcare reform bill contains a lot of issues that you should be very concerned about.  For one thing, your tax details will no longer be private if the bill is passed.  If you are clueless as to what tax details have to do with healthcare, listen up.

Under the 1,000+ pages of legislation currently being reviewed by Congress known as H.R. 3200 or The Affordable Health Choices Act, the government is making it mandatory for every American to have health insurance.  That is a noble objective, but there’s more to it than meets the eye.

The bill legislates that you have to have an acceptable health insurance coverage.  What’s acceptable is stipulated in the bill itself.  If you are not covered by health insurance at all or your insurance coverage is not acceptable, then you will be penalized.  To carry out the provisions of the bill, the government would have to verify that you have acceptable insurance and penalize you if you do not.  The agency tasked with both these responsibilities is the IRS.  Here’s how they intend to do it.

When you fill in your tax returns, you will be required to declare in your 1040 Form whether you have acceptable health insurance.  At the same time your insurance company will be filling in their own forms giving information on the health coverage they provide to taxpayers.  Using these two declarations, the IRS will verify whether you are adequately covered with health insurance.  If you are, then all is fine but if you are not, then you will be penalized with substantial fines administered by the IRS.  But what about those who cannot afford health insurance?

The bill has provisions that give an affordability credit that is a subsidy in the form of a refundable tax credit from the IRS to purchase health insurance.  But here’s the kicker.  To assess whether you are eligible to obtain the affordability credit, the House Choices Administration will be empowered under the bill to obtain confidential personal tax information of taxpayers from the IRS.  Herein is the link between healthcare and your tax details.  Section 431(a) of the Act says that the IRS is obligated to reveal taxpayers information to the Health Choices Commissioner for the purpose of determining their affordability credits.  Among the details to be revealed are your filing status, modified adjusted gross income, the number of dependants you have and any other relevant information prescribed by regulation.

At present, it is a felony to obtain such sensitive information unless it is a matter of extreme importance such as criminal investigation purposes.  But when the new healthcare bill becomes law, all this will change.  For the millions of taxpayers who genuinely cannot afford the type of healthcare the bill mandates, their private tax information goes into the system whether they like it or not.

Certain versions of the bill even grants accessibility to your tax records for much less important reasons such as for the Social Security Administration to find senior citizens eligible to participate in the prescription drug program.

In view of such enforced disclosure of one’s private tax details, you might be wondering whether all this is reform or reveal.

Besides the legalized invasion of privacy by the IRS, there are another 3 causes for concern over the IRS in this whole affair.  The first is whether the IRS can handle this humongous volume of work.  They are already not very efficient with their present responsibilities, what more with an addition of another 300 million Americans health insurance requirements to monitor.

The second area of concern is the IRS' ability to monitor the process so as to prevent any abuse of the system.  There will inevitably be people making fraudulent claims for affordability credits.  Will the IRS have the capacity to police this matter?

Finally, there is the concern about whether the IRS is the appropriate agency to be in charge of administering and enforcing the new healthcare reforms in the first place.

The Democrats who endorse the bill are hoping that the incentive of receiving affordability credit subsidies to purchase health insurance will offset the concerns about the invasion of privacy and other improper elements of the legislation.

Fat hopes.

Obamacare Plans to use the IRS to Police New Healthcare System is a post from: IRS Tax Problem Solver Blog - IRS Help

What's the Automated Collection System? The Automated Collection System (ACS) handles the Integrated Data Retrieval System's (IDRS) balance due and non-filer cases needing telephone communication for resolution. Simply put, the ACS is a computerized network which contacts taxpayers who owe money to the IRS, which is a major IRS problem.

Audit and taxpayer information are a few of the information stored in the ACS. This was developed in the 1980s to provide taxpayer examiners an opportunity to contact delinquent taxpayers, review cases, and issue notices.

Reviews for consistency and validity is integrated in the ACS. It's verified by methods such as court records, bank statements, creditors' files, and corporate files.

The question remains if the ACS is an efficient method to collect taxes. A hearing to decide if private methods were better than the ACS was held by congress.

Privatization is more expensive than ACS, as emphasized by Nina Olsen, an IRS National Taxpayer Advocate. Private collectors collect up to 24% in commissions, but only bring in net revenues of $11 million while the program costs $12 million each year to use.

In comparison, if $7 million were invested into the Automated Collection System, then the revenues could total from $91.8 million to $145 million with no expensive commissions. Olsen projects that the privatization of collection is costing the government about $81 million per year.

On the other hand, the IRS says that it has resorted to outsourcing because it cannot afford to hire more revenue officers to address the IRS issue of debt collection. They are now handling in-house particular cases they regained from private collection firms to examine the efficacy of the process. They intend to determine which method is more efficient by comparing the outcomes.

Colleen Kelley, the president of the National Treasury Employees Union (NTEU), testified at the hearing: "There has been no question from the outset that using private companies to collect taxes is far more expensive than having trained, accountable IRS officers perform this work and poses a severe and unnecessary risk to taxpayers' sensitive and personal information."

Kelley also stresses that IRS officers are the most cost efficient tax collectors in the United States, costing only 40 cents for every $100 collected. She emphasizes that with this resource, there is no necessity to outsource to private debt collection.

The government can regain revenue from unpaid taxes with the ACS. Private debt collection is costly when compared with the cost effective work done by the IRS officers

Darrin T. Mish is an experienced, nationally recognized tax attorney who has been practicing tax law for over a decade. He has an AV rating by Martindale-Hubbell and has been honored with a listing in Martindale-Hubbell’s Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers, and with that in mind, he travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is also a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 888-GET-MISH.

Is the IRS's Automated Collection System Efficient? is a post from: IRS Tax Problem Solver Blog - IRS Help

If you admire the rich and famous for all the money they have, you may be interested to know about Nicolas Cage (of ‘National Treasure’ and ‘Leaving Las Vegas’ fame).  The IRS is taking him to court over $6.2 million ($6, 257,005 to be exact) in alleged unpaid income taxes in 2007.

The Orleans District Court in Louisiana imposed the IRS tax lien on his $3.55 million mansion in New Orleans, which the actor has put up for sale.  If he manages to close the sale at that price, he would still owe the state about $2.7 million.

Actually this is not the first time Cage has had to pay large sums in taxes.  In September 2008, the star settled $666,000 plus interest in back taxes and penalties over allegations of improperly deducting personal expenses from taxable amounts.

Cage’s spokeswoman, Annette Wolf declined to comment.

It would seem that the recession has affected all and sundry, and famous personalities like Cage is no exception.  In April this year, the Huffington Post reported that the star had to sell his Bavarian Castle, Scholss  Niedstein because of the sluggish economy.

In fact, even death does not absolve you from the long arm of the IRS.  The late Republican businessman Ralph Hughes died allegedly owing almost $300 million in corporate taxes and penalties, according to the IRS.  In a suit filed recently, the IRS claimed that Hughes’ companies illegally transferred large sums of money to shareholders and/or companies under their control in order to evade paying creditors, among whom are the IRS themselves.

The IRS claimed that Hughes’ companies, Cast-Crete and Florida Engineered Construction Products Corp. (FECP) did not submit their corporate tax returns for the last four years, despite attempts by IRS officials to obtain the returns, compute and collect taxes due.  As a result, the IRS had to do their own research and came to the conclusion that the companies were liable for $128 million in taxes, $117 million in penalties and $54 million in interests, making the total debt more than $299 million.

Furthermore, the IRS alleged that after those fraudulent transfers of funds to shareholders and other controlled companies, Cast-Crete and FECP became insolvent and were left with only $11 million to pay taxes.  A total of $118 million was distributed, out of which $61 million went to Hughes himself.  According to the IRS, Hughes did not report $27.9 million on his own personal income tax while reporting more than $16 million as interest payments by his companies although there was no underlying debt.

Hughes’ family has strongly disputed the IRS’ claims and they intend to prove his innocence.

The Bigger They Are, The….More They Pay? is a post from: IRS Tax Problem Solver Blog - IRS Help

The Wall Street Journal reported yesterday that Timothy Geithner, President-elect Barak Obama’s nominee for treasury secretary and president of the Federal Reserve, failed to pay $34,000 worth of federal taxes ($43,200, including interest) from 2001 to 2004.

While working for the International Monetary Fund, Geithner failed to pay self-employment taxes from 2001 to 2003. After an audit by the IRS in 2006, Geithner paid the self-employment taxes and interest from 2003 and 2004. The IRS waived penalties for those tax years. At this time he did not pay the taxes from 2001 and 2002.

According to materials released by the Senate Finance Committee, Geithner had paid back the past-due taxes from 2001 and 2002 before his nomination was announced.

However, Geithner failed to pay off the nearly $26,000 he still owed until November, just before his nomination went to the Senate Finance Committee for official review.

Though the incoming administration claims that Geithner’s failure to pay taxes was an “honest mistake”, this seems unlikely.

As an international organization, the IMF does not withhold payroll taxes for Social Security and Medicare from its American employees’ paychecks. If self-employed, American employees are required to pay the tax themselves. According to Obama’s transition officials, Geithner failed to pay the Social Security and Medicare taxes after his accountant told him he was exempt.

Though the faulty accounting advice may not be Geithner’s fault, his failure the correct his mistake is still questionable. Geithner became aware of his tax issues in 2006, at the latest, two years before his nomination. Even after an audit forced him to pay the taxes for 2003 and 2004, he still did not pay for 2001 and 2002. This raises the question of why Geithner would not correct his mistake and just pay for all the years he owed after this problem was brought to his attention.

At the very least, Geithner has caused himself and the incoming administration a great deal of embarrassment. The Treasury Department, which he has been chosen to head, oversees the IRS and is responsible for the collection of taxes. Geithner should not be considered above the law. If an IRS employee were in his position, they would unquestionably lose their job. It seems unfitting and hypocritical for him to serve as the head of the Treasury Department if he can’t perform its most basic function of tax collection.

Should someone like Geithner, who didn’t pay his taxes on time, be able to serve as the head of the Treasury Department? Does his past diminish his authority to enforce tax code? What kind of effect does this news have on taxpayers? What do you think as a taxpayer? I welcome your comments.

Timothy Geithner, Treasury Secretary nominee, failed to pay federal taxes is a post from: IRS Tax Problem Solver Blog - IRS Help

Before you hire any tax professional to help you solve an IRS Problem, it's important to thoroughly investigate THEIR ability to help you. This is a tough business (IRS Problem Resolution) and there are a lot of sharks out there. Almost every day I hear horror stories about people hiring the large national tax resolution firms (you know who they are, I just can't name them because they will sue me if I do) and nothing ever happens on there case. Most often when you call one of these firms, you speak with a salesperson, not a lawyer or the tax professional that will handle your case. When you call my firm you will get to speak with a lawyer after setting an appointment. A lawyer who handles IRS Problems on a daily basis and can gain valuable insight into how they might be able to help you with your unique IRS Problem.

At other times I hear stories about the local guy who will dabbles in solving IRS problems and either he takes too long to solve the case (because he has no idea what to do) or he eventually just gives up. The IRS bureaucratic machine is simply too much to handle if you don't do this type of work, day in and day out.

I made these videos to help you understand what you should ask when trying to decide who to hire to solve your IRS Problem. Even if you don't decide to hire my firm (we represent U.S. taxpayers all around the country and the globe) that you know what you should be looking for when trying to get the help you need. Of course, I want you to consider us for your IRS Problem but more importantly to me, I want you get the help you need. Having an IRS Problems is awful. It takes a toll on your mentally, emotionally, and physically. It can cause damage to your marriage and your family life. Nothing is worth all that. So I urge you even if you don't get help here, get help somewhere. That's all for today. I hope you learn something from the video.

20 Questions to Ask an Enrolled Agent Before You Consider Hiring Them to Solve an IRS Problem Part 2 of a 4 Part Series is a post from: IRS Tax Problem Solver Blog - IRS Help

I'm asked on a regular basis questions to ask of an Enrolled Agent (or for that matter a Tax Resolution Company) before hiring them to help you solve an IRS Problem. How do you know that they know what they're talking about? How do you know they have the experience they that they need to help you during this most anxious and anxiety filled time in your life?

I want to say that I have nothing against Enrolled Agents. I have trained many Enrolled Agents over the years in the finer aspects of resolving IRS Problems. There may even be one in your city or town. That's not the point. But like any profession there are good, qualified, honest Enrolled Agents and some less educated and even unscrupulous Enrolled Agents as well. So I undertook these videos to explain what to look for and questions to ask of any tax practitioner before selecting them to help you solve your IRS Problem.

Feel free to post comments or comments and I will do my best to see that your questions are answered.

20 Questions to Ask an Enrolled Agent Before You Consider Hiring Them to Solve an IRS Problem Part 1 of a 4 Part Series is a post from: IRS Tax Problem Solver Blog - IRS Help

Well…Barack Obama won the presidency and no matter how you feel about that; one thing's for sure. Things are going to change. That was his campaign slogan right? How will that 'change' impact the IRS and their ability and willingness to collect delinquent taxes? I'm glad you asked. It is very likely that due to the worsening economy and rising deficit that IRS collections will continue to increase. The federal government has dramatically increased hiring in the areas of border enforcement and the Transportation Safety Administration. Since the IRS is actually the agency responsible for the collection of federal government revenue, it only makes sense that one of the first priorities of an Obama administration would be to increase hiring of IRS collection personell. This course of action even fits with the campaign rhetoric that the rich should pay their share. So don't be surprised if IRS collection continues to accelerate to unprecendeted levels in an Obama administration. To be fair, John McCain would have likely done something very similar. Take a look at the special video that I prepared addressing this situation:

Obama Wins!! How does that affect your IRS Problem?? is a post from: IRS Tax Problem Solver Blog - IRS Help

A huge percentage of all individual tax returns processed by the Internal Revenue Service's modernized account information computer system. Known as the Customer Account Data Engine, or CADE. This system is the centerpiece of modernization efforts at the IRS. CADE is handling significantly more tax returns each year. CADE, which is at the core of the effort to replace many of the agency's aging systems, dramatically speeds up internal IRS processing, permitting taxpayer accounts to update on a daily basis. This helps the IRS better administer the nation's tax system. The IRS is rolling out CADE in a series of "releases," each improving on and adding to the system capabilities. CADE was envisioned to replace the legacy Master File system, parts of which date back to the Kennedy Administration and will eventually house the account information of more than 200 million individual and business taxpayers.

The IRS will process nearly 140 million individual tax returns in 2008 and collect approximately $2 trillion in federal government revenue with the help of this system. Once processed by CADE returns are then analyzed by the computer system and compared against IRS data. As the computer processes each return error notices, balance due statements and audit alerts are all automatically generated. Each return requiring further collection is placed into a "notice queue" to receive a series of timely notices, each designed to increase compliance. If the computer notice is not successful in collecting past due tax or encouraging the taxpayer to file past due returns, the account is then assigned to the automated collection system (ACS), or in more extreme cases assigned to an IRS agent for collection.

Wage and bank account levies as well as federal tax liens can all be issued through the computer system. This highly impersonal way of enforcing the collection of taxes is often problematic and compounded by the "not so friendlier" IRS agents that man the phones at call centers. It's not an uncommon experience for a taxpayer to get lost in this complex "maze" and the pure frustration can become maddening. Often the frustration factor alone results in increased collection by the IRS because it's simply easier and more time efficient for some taxpayers to pay the computer generated bill, rather than fight it, even when the IRS is wrong. While the automation of an agency that employees nearly one million people makes sense from an efficiency standpoint, it likely spells continued frustration from a "customer service" standpoint. Taxpayer disagreements with computer notices and errors inevitably mean the involvement of a real live IRS agent after weeks or even months of frustrating phone calls.

Furthering taxpayer frustration as time passes, interest and penalties are accumulating. A simple tax problem can become a complex tax problem at blinding speed. Unfortunately the procedural steps to exercising these rights are often confusing and further must be implemented in a short period of time (usually 30 days or less). A competent professional can save you time, stress and money. Why? A tax professional deals with the IRS and taxpayer problems all day, every day. Most taxpayers only have limited contact with the IRS regarding their own personal circumstances. A competent tax professional on the other hand has seen a wide variety of tax problems regularly. In the long run you'll spend less time and SAVE money by hiring a competent professional to handle your tax problem, even the "minor" ones. Plus you'll have peace of mind and sleep a lot better each night. Why not give us a call tollfree at (888) 438-6474? We represent taxpayers in all 50 states and around the world.

Welcome to Tax Collection Tyranny in the Computer Age is a post from: IRS Tax Problem Solver Blog - IRS Help

If you are awaiting an economic stimulus payment or have yet to file, you can avoid common errors that may delay your payment. The Internal Revenue Service, which is still issuing economic stimulus payments, has been studying trends and common issues in filing errors and questions posed by people calling its customer service telephone lines. The most common questions posed to the IRS are from people wondering when they will receive their stimulus payment. Here's how to avoid common mistakes:

1. File only one tax return – People should file only one 2007 tax return. It takes the IRS up to 12 weeks to process paper returns and issue the stimulus payments. However, some people are filing more than one tax return in an effort to receive a stimulus payment, this can further delay your stimulus payment. The IRS is concerned there will be more multiple filings as the October 15 deadline approaches for filing a return in 2008.

2. List qualifying income – Some people are listing their monthly income instead of annual income. People must list their annual amount of qualifying income to be eligible for the minimum payment of $300 ($600 married filing jointly.) The qualifying income required by law is at least $3,000 in benefits from Social Security, Veterans Affairs and Railroad Retirement, earned income and/or combat pay.

3. Review Your Tax Liability – Some people who have either small amounts of tax liability or no tax liability are getting smaller stimulus payments than they expected or none at all. Generally, the law provides for a maximum stimulus payment of $600 ($1,200 for married couples) or an amount equal to a taxpayer's tax liability, whichever was less. Tax liability is the net amount of federal income taxes paid after deductions and credits. If people had no tax liability but had at least $3,000 of "qualifying income" from specific sources, they would be eligible for $300 ($600 for married couples.) There also is a $300 payment for each qualifying child.

4. Amended return – Generally, you cannot file an amended return solely to get an economic stimulus payment unless they are a retiree, veteran or have other "qualifying income." While amended returns will be processed to correct the income, deductions and income tax as appropriate, the economic stimulus payment amount will not be adjusted based on an amended return. If you do not receive a payment this year, you can claim it when they file their tax return in 2009.

5. Use Your Most Current Address – You must use their most current address in order
to receive a timely payment. If you change addresses after filing you should complete Form 8822 and a change of address card with the U.S. Postal Service. If the postal service is unable to deliver the payment, it is returned to the IRS. You must file a 2007 tax return by October 15 in order to receive the economic stimulus payment this year, even if you normally do not have a filing requirement because your income is too low or not taxable. The IRS has already issued 90 percent of the economic stimulus payments but will continue to issue payments through December 2008. If you filed a 2007 tax return eight to 12 weeks ago but have not received a payment, the quickest and easiest way to track the status of the payment is to go to "Where's My Economic Stimulus Payment?" on the IRS website. The online tool will report when the payment was or will be issued. You will need your Social Security Number, filing status and the number of exemptions claimed on your tax return to use this
tool.

The IRS online tool will also report other issues, such as ineligibility because income
was too high or the returning of an undeliverable payment to the IRS. The economic stimulus payment begins to phase out for individuals whose income is $75,000 or more and for joint returns with income of $150,000 or more. To be eligible, a person cannot be a dependent or eligible to be a dependent of another person. To be eligible, an individual must have a valid Social Security Number unless his or her spouse serves in the military. Supplemental Security Income (SSI) does not count as "qualifying income" for stimulus payment purposes.

The biggest mistake of all would be failing to file a 2007 return in order to receive the stimulus payment, especially for people who are eligible but who do not normally file a tax return because their income is low or nontaxable. People in this category can use a Form 1040A, provide a little information to complete the return and send it to the IRS by October 15, 2008. If you do not file a tax return by October 15, 2008, you can still obtain your economic stimulus payment when you file your 2008 tax return. If you wait until next year to file, your payment will be based on your 2008 income and personal situations rather than on 2007 information.

Avoid Common Errors that Delay Stimulus Payments is a post from: IRS Tax Problem Solver Blog - IRS Help

Usually the IRS wants your money, however unclaimed refunds totaling approximately $1.2 billion are awaiting nearly 1.3 million people who failed to file a federal income tax return for the tax year 2004. However, to collect the money, a return for 2004 must be filed with an IRS office no later than October 15, 2008. Those due a refund who did not file a 2004 tax return could collect even more money by also filing a 2007 tax return to claim the economic stimulus payment. The IRS estimates that half of those who could claim refunds for tax year 2004 would receive more than $552. In some cases, individuals had taxes withheld from their wages, or made payments against their taxes out of self-employed earnings, but had too little income to require filing a tax return. Some taxpayers may also be eligible for the refundable Earned Income Tax Credit. In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years plus extensions, the money becomes property of the U.S. Treasury. For 2004 returns, the window closes on October 15, 2008.

The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund. You can’t get a refund unless you file a tax return. Don't risk losing your tax refund. The IRS reminds taxpayers seeking a 2004 refund that their checks will be held if they have not filed tax returns for 2005 or 2006. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans. By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2004. Many low-income workers may not have claimed the Earned Income Tax Credit. Although eligible taxpayers may get a refund when their EITC is more than what they owe in tax, those who file returns more than three years late would be able only to apply it toward the taxes they owe (if any). They would not be able to receive a refund if the credit exceeded their tax.

IRS Has $1.2 Billion for People Who Have Not Filed a 2004 Tax Return is a post from: IRS Tax Problem Solver Blog - IRS Help