Have you ever received a Statutory Notice of Deficiency from the IRS?  If you have never had the misfortune of receiving one, you might not even know what a Statutory Notice of Deficiency is. In simple terms, this document is basically a notice from the IRS that you owe them a certain amount of money in taxes and that you have a time period, usually 90 days in which to pay up. In most cases, these documents are sent in good faith by the IRS and are worded in a polite way. But ignore these notices at your peril.

Receiving a Statutory Notice of Deficiency is not the end of the world.  The notice itself is not a legal document and is used only as a last resort. The IRS will give you many opportunities to pay off your debt or to set up a payment plan that is fair to you based on your current financial situation.  A statutory notice of deficiency is the IRS' official way of informing you of an impending grave situation and it is up to you to act fast before things have a chance to get worse.

Here's an action plan for you should you receive a Statutory Notice of Deficiency. Your first action step should be to call the IRS and let them tell you what your options are.  They will discuss with you how you can pay off your tax debt.  It would be unlikely that you could pay it off entirely in one lump sum.  So your next best option would be to suggest a mutually agreeable payment plan with the IRS.  It is alright to agree on a payment plan even though you may not be able to keep to it entirely.  It would at least buy you some time during which other more drastic collection methods like a bank levy or wage garnishment would be suspended.

At this point, you may be eligible for an offer of compromise.  An Offer in Compromise is where you are allowed to make a part payment of your tax debt and that is received as full settlement.  However, only a small percentage of people qualify for such a compromise.  The IRS will likely determine exactly how much you are capable of paying over the next few months and ask for that amount.  If you are eligible for an Offer in Compromise, you should accept the amount of payment required by the IRS without trying to negotiate for a bigger discount. Whatever the repayment amount set by the IRS in your Offer of Compromise is already a much reduced amount that most people would not tbe granted.  The IRS wants to get as much as they can but they don't want to ruin your life, so you would do well to go along with the offer.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. 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 1-888-GET-MISH.

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Major tax problems of large tax amounts usually stem from 2 causes.  It is either the taxpayer has fraudulently filed his returns or he has not been paying enough taxes over the years.  If you have recently been saddled with a giant tax bill, here are a few places you can look for assistance with IRS debt.

In most cases, the first place to go to for assistance in IRS matters is the IRS office itself.  The Internal Revenue Service has a reputation for being inflexible and even downright rude when it comes to dealing directly with people.  Actually, the taxpayers are just as culpable in that they often yell and behave rudely to the IRS personnel (when it comes to money, it is easy to get hot under the collar).  But if you treat your IRS agent with the respect he or she deserves and are prompt in responding to all IRS correspondences and contacts with you, the IRS will be more than willing to help you find a payment plan, or even a compromise, that will result in both sides being happy.

If you want an alternative to going to see the IRS, you can talk to an accountant instead.  They do a lot more than just simple tax preparation. A good accountant knows the tax laws very thoroughly and can advise you on exceptions and exemptions you may be entitled to that can reduce or even eliminate your tax debt if that is possible.  The worst situation here is that they will tell you that you don't have any other options other than to settle your tax debt.

If your accountant can't help, maybe a lawyer can. If you are positive that this tax debt is unreasonable or even unfair, then this is the next logical step. The earlier you approach a lawyer the better.  You should not wait until the letters from the IRS gets nasty.  The quicker you act and begin litigation, the stronger your case will be.

If you are really not able to settle your tax debt, you may need a bankruptcy lawyer.  However, there are strict rules on what kind of tax debt you can write off and how. If your debt is due to you lying on your taxes, you can forget about getting any leniency.  If you are trying to write off a recent tax bill that is less than 3 years old, you won't be able to do that either.

These are some places to obtain assistance with your IRS debt.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. 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 1-888-GET-MISH.

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Tax attorney Darrin Mish was quoted in MSNBC and The Orange County Register in connection with the way California Lawmakers use their Lawmakers’ Allowances.  Before we get into what Attorney Darrin actually said, we need to give you some background information.  We all know that all state assemblymen in every state are given lawmakers’ allowances to cover their expenses while they are in the state capital carrying out their duties like what they are elected for.  What most people do not know is that the allowances given them are tax free and quite substantial, especially in California.  This allowance is known as ‘per diem’ meaning ‘per day’ in Latin.

California lawmakers receive an allowance of $141.86 a day, the fifth highest allowance rates in the country after Alaska ($189 a day), Tennessee ($185 a day), Georgia ($173 a day) and Pennsylvania ($154 a day).  However, in terms of amount of allowances, the Californian lawmakers are the highest because of their long legislative sessions.  In 2009, the number of days Californian lawmakers spent in legislative sessions was more than 200 while Alaska’s days were 90, Tennessee’s 45, Georgia’s 40 and Pennsylvania’s about 100.  And because the 2009 rate was as high as $173 a day, some Californian lawmakers took home about $37,000 in tax-free allowances per person and the state government forked out $4 million in total allowances, apart from lawmakers’ salaries which were reduced from $116,208 to $95,291 in December.

So we have established that California lawmakers are paid the most allowances in the country.  That is not the issue.  The issue is what they do with the money.  It has been discovered that many of these lawmakers use their tax-free allowances (that ultimately come from tax payers) to buy second homes in the state capital, Sacramento.  And when their term is up, these houses are often sold at a higher price, thus making these legislators a tidy profit of often hundreds of thousands of dollars.

So the issue is whether it is right for lawmakers to use tax payers’ money to make capital investments in the form of houses and rake in profits after a few years.  Tax attorney Darrin Mish had this to say in his response by email:

“I can't seem to find anything illegal about what they're doing.  I think that given the economic condition of California and of the US that it cuts against the spirit of the law for lawmakers to be personally enriching themselves using the benefits of elected office.  But again I can't seem to find anything illegal about the situation.”

Some wily lawmakers like Orange County's Jose Solorio and Tom Harman used their allowance to purchase second homes and then used those homes to secure additional income tax deductions.  Another Orange County assemblyman, John Campbell bought a new home in northern Sacramento reportedly for $300,000 in 2000.  Over his 5 year term as state assemblyman and member of the State Senate, his per diem came up to $132,930.  Eventually he sold his house for $665,000.  Taking his entire per diem into the purchase, Campbell spend about $167,070 of his own money and made a cool $497,930 in profit from the transaction.

Admittedly, there were other assemblymen who did not make such profits by doing the same thing.  Nonetheless, as far as the law is concerned, none them have transgressed, as attorney Darrin Mish has rightly pointed out.

Read more about this issue at these links:

http://www.msnbc.msn.com/id/35477559/ns/local_news-orange_county_ca

http://www.ocregister.com/news/-235056–.html

The IRS has taken some strict measures to recoup what is due to them by Bradenton Preparatory School in Florida.  According to online news portal, Bradenton.com the federal agency issued a letter in December last year to all parents with children in the school to hand over all tuition and other fees to the IRS due to the large amount of taxes the school owes.  The order from the IRS also includes any other school assets or rights to assets parents may be holding, including deposits, credits and money.  Failure to comply would result in action taken against the parents.

The IRS letter dated December 10, informed parents that the owners of the school, The Children’s Place Inc. owes at least $1.25 million in corporate taxes, interests, late fees and penalties that were unpaid in 2007 and 2008.  The school has been facing financial problems resulting in repossession of its vehicles and foreclosure lawsuits on its properties.  In addition, the Better Business Bureau has received complaints about the school from concerned parties and the Florida Department of Revenue have filed a $12,285 tax lien for unpaid unemployment taxes.

When contacted for comment, Florida tax attorney Darrin Mish commented that the IRS action is an aggressive move on the part of the agency, adding that the IRS frequently issues such a notice to pressure taxpayers to pay their dues or commit to a payment schedule, in particular those who owe a lot of money or those who persistently ignore IRS letters.  Mr. Mish also reiterated that those who do not comply with the IRS directive “would be subject to penalties from the IRS, pretty serious penalties.”

This action by the IRS has caused some parents to take the drastic step of pulling their children out of the school which is obviously a matter of grave concern to the owners as they try to overcome their financial problems.  The Children’s Place Inc. has already submitted revised and corrected tax returns and is awaiting the IRS’ response.  In addition, they have set aside the necessary funds for settlement of some of their debts.

In the meantime, two of the school’s financiers intend to foreclose on the school property because of failure to pay dues on their loans of $5.7 million.  Already, non-payment has resulted in the repossession of one sports utility vehicle and the school is now on the verge of losing another of its vehicles, a Chevrolet pickup truck.

To read more about this article, click this link:

http://www.bradenton.com/2010/02/14/2055373_p2/irs-dont-give-bradenton-prep-money.html

How do our lawmakers in the state assembly use their legislators’ allowances?  The truth may astound you.

Lawmakers in California, like their counterparts from other states, receive tax-free allowances for their legislative work.  These allowances, calculated daily, are meant to compensate for out of pocket expenses the legislators have to incur while living in the state capital.

California state law states that a lawmaker’s home is where he is registered to vote, which obviously is the district he or she represents.  In addition, a special provision inserted into the federal tax code provides for state legislators in any state to choose which home is their primary place of business.  If they choose their district, and their district isn't located near the state capitol, they will be given their tax-free allowance.  The allowance is known as a ‘per diem’, Latin for ‘per day.’

Not many people may know this, but what many lawmakers have done is use their per diem allotment to buy a second home in the capital city, Sacramento where they stay for the duration of their legislative work.   What stands out about California is the amount of allowances lawmakers receive in comparison to that of assemblymen in other states.  California’s assemblymen receive a per diem of $141.86.  This is among the highest in the country, though not the highest, as other states like Alaska ($189 per day), Tennessee ($185 per day), Georgia ($173 per day) and Pennsylvania ($154 per day) pay higher rates.  But the Californian lawmakers still take home more than these other states’ lawmakers because of the state’s unusually long billable period – more than 200 days in 2009.  Compare this with Alaska (90 days), Georgia (40 days), Tennessee (45 days) and Pennsylvania (100 days).

And if using taxpayers’ money to purchase their houses is not appalling enough, these lawmakers usually sell their properties for hundreds of thousands of dollars in profit when their term of service comes to an end.  Furthermore, there are other benefits to taxpayer-subsidized homeownership.  If the mortgages of their two homes do not exceed $1 million, under federal income tax laws, they can deduct the property taxes of their second home in addition to the home mortgage interest thus earning them more savings.

The Orange County register, as reported in MSN.com’s local news portal interviewed Darrin Mish, a prominent IRS attorney and tax expert on his views on this apparent loophole in the law.  In an emailed response, Mr. Mish stated, “I can't seem to find anything illegal about what they're doing.  I think that given the economic condition of California and of the US that it cuts against the spirit of the law for lawmakers to be personally enriching themselves using the benefits of elected office.  But again I can't seem to find anything illegal about the situation.”

Mr. Mish’s views are shared by other prominent tax lawyers also.