Unfortunately, in marriage and life, everything is not always "Happily Ever After". If that is the case, now what? In order to qualify for Spousal Relief, you must meet all of the following conditions to qualify for innocent spouse relief: 1. You must have filed a joint return which has an understatement of tax due to erroneous items of your spouse (or former spouse); 2. You must establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax; and 3. Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax. It’s important to note that a request for innocent spouse relief will not be granted if the IRS proves that you and your spouse (or former spouse) transferred property to one another as part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as a creditor, ex-spouse, or business partner.
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Generally the IRS has ten years from the date tax is assessed to collect the unpaid liability. Once a statutory expiration date is reached, the IRS must then abate the tax and release any liens filed against the taxpayer's property. This action is rarely automatic. Frequently the IRS will continue collection activity after a statute has expired, either out of administrative backlog or a perception of taxpayer ignorance. An important taxpayer “tip” in handling any outstanding tax liability that spans multiple tax years, is to designate any voluntary payments to the most recent assessments. The reason being that these assessments have the longest statutory time frame subject to collection activity. Earlier assessments have shorter statutory time periods. If a taxpayer does not make a designation of a voluntary payment, the IRS will always apply the payment to the tax period with the shortest time remaining under collection statutes. This is in the best interest of the government not the taxpayer. Frequently the IRS will apply voluntary payments this way out of default regardless of any taxpayer designation. It’s important to document any designation clearly on the payment.
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If a taxpayer is unable to pay his or her tax liability, and collection activity would create an economic hardship the IRS will consider placing the account in a “hardship” or currently not collectible status. In considering a taxpayer’s account for “hardship” status the IRS will compare the taxpayer’s monthly gross income against what they call “allowable” expenses. IRS monthly allowable expenses are national averages for food, clothing, miscellaneous expenses, housing, transportation, medical expenses and insurance, as well as proper tax withholding and payments. These “allowable” amounts vary depending on household size and local standards as well.
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IRS Currently Not Collectible/Hardship Status/Status 53 [ 0:01 ] Play Now | Play in Popup | Download (2356)There are a lot of companies online and offline that want your IRS Problem Resolution business. They will go to just about any lengths to get too. My understanding of most of the "national" companies is that whomever calls their tollfree number is greeted by a salesperson who guarantees that their tax problem can be settled for mere "pennies on the dollar" as long as a credit card number is immediately forthcoming. Well….that's not how we do business. Things are different at my firm. We aim to help real people with real problems. To be totally frank with you, an Offer in Compromise is not right for everyone…in fact it's not right for most taxpayers. But in certain situations, it's a terrific choice and the best route to take. Is it best for you? Take a look at the video that I put together to explain the process and to help you decide if an Offer in Compromise is the best option for solving your IRS Problem for good. What we do is a comprehensive analysis on every client that is as unique as each individual IRS Problem. Only after that analysis is complete do I advise you as to the best possible solution to your problem. In some cases, it's an Offer in Compromise and in some cases it's not what you want to hear. But in every case, it's the God's honest truth.
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Recently I was contacted by WFLA-TV Channel 8 in Tampa, Florida to be interviewed about a common problem that many taxpayers are facing. They’re not receiving their Economic Stimulus Package Checks on schedule. The clip from the newscast is at the bottom of this blog post.
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