Archives for January 2011

Oprah Hates Writing Checks to the IRS

January 30, 2011 by

Chicago (January 21, 2011)
By Michael Cohn
accountingtoday.com

Oprah Winfrey told Piers Morgan that the most difficult check she has to write each year is for the Internal Revenue Service, and she usually needs some tequila from her accountants when she signs it.

Winfrey admitted to Morgan during the debut episode Monday evening of the CNN talk show he is taking over from Larry King that she only signs checks for amounts over $100,000 nowadays. Winfrey launched her new cable TV network, the Oprah Winfrey Network, or OWN, earlier this month. But she still has “several hundred” checks to sign for over $100,000.

“It would knock your socks off,” she told Morgan. “Millions are going out.”

Morgan asked if that was painful. “The most pain I feel — and my accountants will tell you this — is every time I write a check to the IRS, it’s a ceremony. For years they came in with wine. Now they come in with tequila. It’s a tequila-signing ceremony.”

Morgan asked her what was the most painful check she ever had to write to the IRS, but Winfrey cannily ducked the question, teasing Morgan, “You’re good. You think I’m going to give you the number. No, no, no, no, no.”

Morgan noted that Forbes magazine estimates that Winfrey is worth $2.7 billion, and asked if the figure was accurate. She responded, “I knew you were going to go there sooner or later. I’m not sitting around counting it.” However, she added that she knows how much she’s worth “because I already had counted it.”

Morgan followed up by asking Winfrey about her philanthropic endeavors, which include the Oprah Winfrey Leadership Academy for Girls, a school she runs in South Africa for economically disadvantaged young women. Morgan noted that Winfrey reportedly has given away over $300 million to various charities, and Winfrey corrected him, saying she knew it was more than that amount.

He asked if she knew how much she has given away, and she replied, “No, I really don’t, but I know it’s more than $300 million. I have this school and it’s ongoing and I’m responsible for all of these girls and them getting an education, and I pay for every single thing and I think that the charitable work that you do — and when I’m gone everything that I have is going to go to charity because I don’t have children and I believe that that’s what you should do, that that’s how you should live your life. To whom much is given, much should be given back. To me, the money, it’s certainly a wonderful thing, but it is in direct proportion to how you’re able to bless yourself and how you bless others with it.”

Asked whether money can buy happiness, Winfrey responded, “It can certainly pave the way for it.”

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Are Tax Troubles Ruining Your Marriage?

January 27, 2011 by

Supermodel and host of the reality television hit Project Runway, Heidi Klum is going into the advice business. Klum plans on sharing her insights on fashion, beauty, parenting and relationships with her fans.

Klum is married to pop singer Seal, and from all reports, the two have a strong and loving relationship. It’ll be interesting to see how the couple’s considerable financial wealth impacts her relationship advice – after all, financial issues are the leading cause of marital strife. MSN money recently detailed half a dozen ways that money can wreck a marriage.

Not on the list but definitely a big problem for many couples: tax problems. Unresolved tax issues can ruin your relationship. Here’s why:

Stress and Tension

The IRS uses aggressive and persistent collection techniques. The phone calls, intimidating notices, and threats of liens, levies on your wages and bank accounts, and seizure of your car or house can create an atmosphere of fear and anxiety that takes a toll on even the strongest marriages.

Financial Impact of IRS Actions

Tax liens can prevent a couple from borrowing money. This can make it difficult to buy a home, a car, or fund a child’s education. Not being able to realize long-cherished dreams such as these can create resentment and even hatred within a relationship. Additionally, many employers review a prospective employee’s credit report for IRS liens and often reject taking on a prospective employee who’s had trouble with the IRS. In today’s competitive job market, that can make finding and keeping a job even tougher.

What Can Be Done About IRS Tax Trouble?

Tax trouble doesn’t have to wreck your marriage. There are solutions to your outstanding tax issues. Often, simply beginning the process of dealing with unpaid taxes, unfiled tax returns, or other tax issues, eliminates a lot of stress and tension from the marriage. Knowing that the tax problem is getting fixed can put a couple back on the path to building a strong, happy life together – and that’s what a relationship is supposed to be about!

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Are You Part of the “IRS Tax Lien Explosion”?

January 20, 2011 by

Reading this article can leave the typical taxpayer feeling a little nervous. If you’ve already had trouble with the IRS, or are currently trying to resolve tax problems, that article, which charts the dramatic increase in IRS tax liens, might make you very nervous indeed!

The IRS Is Stepping Up Tax Enforcement Efforts

Earlier this month, National Taxpayer Advocate Nina Olsen released her annual report to Congress. The Advocate expressed continuing concern that the IRS’s increasing use of hard-core enforcement actions, particularly tax liens, is inflicting unnecessary harm on financially struggling taxpayers.

Over the past seven years, the IRS has filed more than five million tax liens. 1.1 million liens were filed in 2009! The impact of these liens is tremendous. The individual tax payer will have their credit negatively impacted, making it harder for them to borrow money to buy a house, car, or fund a child’s education. A tax lien can affect a taxpayer’s employability. Not every company is willing to hire someone who’s had trouble with the IRS.

What To Do About Your IRS Tax Lien

If you have received a notice from the IRS about a potential or impending federal tax lien, don’t panic! There is hope for your situation. Begin by realizing you need to get help right away! Resolving tax problems requires expert, experienced assistance. Don’t try to go it alone!

There are many routes to settling old tax debt and eliminating federal tax liens. Don’t trust anyone who claims to know the solutions to your tax problem before they understand your unique circumstances! Every tax problem is different. You want a qualified tax professional to work with you to discover the best way to resolve your tax issues.

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Federal Tax Liens: What You Need To Know

January 18, 2011 by

Nothing in this world is certain but death and taxes – and nothing can strike fear into the average person’s heart like a federal tax lien notice! A federal tax lien is a tool the IRS uses to collect outstanding tax debt. A federal tax lien gives the IRS claim to your property; after some legal proceedings, they can seize and sell your land, vehicles, and other valuables to settle your tax debt.

If you’ve received a notice from the IRS telling you that you are or soon will be subject to a federal tax lien, you may be experiencing feelings of fear and anxiety. Those feelings are natural – but don’t let them stop you from dealing with the situation. Tax problems do not resolve themselves on their own. If you’re receiving federal tax lien notices from the IRS, the time to act is now:

 

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Is An IRS Audit The Last Word? Not Necessarily!

January 15, 2011 by

Audit Appeals

Once you receive the results of an IRS audit – which generally includes a large bill that you have to pay – you have three options.  You can pay the bill, request an informal review with the auditor’s group manager, or file a formal request for appeal.

If you went through the initial audit without help or representation, NOW is the time to get professional help. Have a licensed tax professional review your situation.  There are many factors that go into deciding whether or not an audit stands or is overturned upon appeal.

Bear in mind that IRS auditors are trained to get information out of the taxpayer. The tactics they use are often frightening, especially to the taxpayer who doesn’t know what rights and protections they have.  An IRS auditor is not going to volunteer the information that their decisions can be questioned – or even overturned!

Appealing An IRS Audit Successfully

Appealing an IRS audit is difficult, but it is not impossible.  Prepare yourself for success by having competent, professional tax assistance from an audit accountant, licensed tax professional, or other expert. The vast majority of audits that are overturned or altered significantly upon appeal have a tax professional involved.  An individual taxpayer, particularly one with no tax experience, is at a significant disadvantage when they try to appeal on their own.

The primary advantages of having a tax professional represent you in appealing an IRS audit is that it introduces a significant degree of separation between you and the IRS as well as having someone with years of experience in dealing with the IRS on your side.  The IRS will be talking to your tax accountant, not you.  The phone calls will go to the tax professional’s office – not your home!  This eliminates stress and gives you the peace of mind that the problem is being handled. Your tax professional’s experience will also get you a better result than you could have gotten on your own since he knows how the IRS operates, what your rights are, and how to maneuver through the IRS maze.

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Preparing for Tax Season 2011: What To Do If You Have Outstanding Tax Problems

January 10, 2011 by

It’s that time of year again, when newspapers and websites are full of information about what you need to do to get ready for the upcoming tax season.  There’s lots of websites that offer free tax preparation, agencies that coordinate volunteer tax preparers and do-it-yourself guides that promise to reduce even the most complex return into a quick and easy refund check.

It sounds like good advice – but is it good for you?

The answer is a qualified “It depends!”  Many of the resources you’ll find listed in articles like these are great for taxpayers who have simple returns and are current with their tax obligations. However, if you’re currently embroiled in negotiations with the IRS or have tax issues that you haven’t addressed, you need professional assistance.

Finding Help For Your Tax Problems

The best way to help yourself resolve your tax problems is to work with a qualified tax professional.  You have to be honest with these people and let them know the full magnitude of what they’re dealing with.  Don’t withhold information for fear that the tax professional might ‘judge you’ – there’s nothing that they haven’t heard before!

Often times, people think that their tax problem is so unique and one of a kind that nothing could be done to resolve it.  Nothing can be further from the truth! Every tax problem has a solution.  You just need to work with someone who knows how to find it!

This year, the deadline for filing your 2010 federal tax return is April 18th.  That means you have just over one hundred days to get ready to send your return and any payment due to the IRS.  You also have one hundred days to start addressing your outstanding tax issues. Don’t wait until the last minute — there’s nothing harder to find than a tax expert with a free moment on April 15th!  You deserve expert assistance with your tax problems.

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IRS pursues ‘Little Fockers’ star Teri Polo

January 3, 2011 by
Posted by Robert Snell (The Detroit News) on Mon, Jan 3, 2011 at 11:33 AM

“Little Fockers” star Teri Polo has the country’s top-grossing comedy and a doozy of a tax debt. According to public records, she owes more than $458,000 in delinquent federal taxes.

The 41-year-old Delaware native has starred alongside Robert De Niro and Ben Stiller in “Meet the Parents” and two sequels, and was in “West Wing,” among other notable roles. Her tax woes were highlighted here two years ago before the IRS hit her with a new lien in 2010.

What’s owed:

  • The IRS filed an $116,620 lien against her Jan. 25, 2010, with the Los Angeles County Recorder of Deeds. She owes income taxes from 2008.
  • The IRS filed a $114,844 lien against Polo on Aug. 7, 2009, in the Kent County (Del.) Recorder of Deeds office. According to this lien, she owes income taxes from 2007.
  • The state of California filed a $91,748 lien against Polo on April 24, 2008, in the Los Angeles County Recorder of Deeds office. She owed taxes from 2005 and 2006, according to the recorder’s office. The lien was released Dec. 18, 2009.
  • The IRS filed a $227,144 lien against Polo on Feb. 20, 2008, in the Kent County Recorder of Deeds office. She owes income taxes from 2005 and 2006, according to the lien.

Her side:

Manager Bob McGowan previously told The Detroit News that Polo fell behind paying taxes while going through a costly divorce and during an acting hiatus while raising her children.

She has negotiated a payment plan with the IRS, and her multi-million “Little Fockers” pay day should help toward the debt, McGowan said.

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IRS Has Problems Identifying Prisoner Tax Fraud

January 3, 2011 by

Washington, D.C. (January 3, 2011)

By Michael Cohn from accountingtoday.com

Significant problems remain with efforts by the Internal Revenue Service to identify and prevent tax refund fraud by prisoners after the passage of a 2008 law aimed at curbing such issues, according to a new government report.
The report, by the Treasury Inspector General for Tax Administration, found that despite the passage of the Inmate Tax Fraud Prevention Act of 2008, refund fraud committed by prisoners is increasing at a significant rate. The number of fraudulent prisoner tax returns identified by the IRS has more than doubled from 18,103 tax returns in calendar year 2004 to 44,944 tax returns in calendar year 2009. Fraudulent refunds claimed rose from $68.1 million to $295.1 million during the same period.

“More than two years ago, Congress gave the IRS the authority to share tax information with the Federal Bureau of Prisons,” said Senate Finance Committee ranking member Chuck Grassley, R-Iowa, in a statement. “The IRS and the Federal Bureau of Prisons still don’t have an agreement in place to share information. Meanwhile, the number of inmates’ false returns and refunds continues to rise. This signals that prisoner tax fraud is a low priority for the federal government. The agencies need to take action and correct that impression. While they wait, taxpayers are picking up a growing tab for prisoner tax fraud.”

TIGTA found that, as of October 2010, the IRS had not completed the required agreements to allow the IRS to disclose prisoner tax return information to prison officials. As a result, no information has been disclosed to either the Federal Bureau of Prisons or State Departments of Corrections.

In addition, the Calendar Year 2009 Report to Congress on prisoner fraud is incomplete. The report stated the IRS identified 44,944 false or fraudulent prisoner tax returns during calendar year 2009. However, the processes the IRS uses to identify prisoner tax returns may result in the IRS understating the amount of prisoner fraud. Finally, TIGTA’s review of the process used by the IRS’s Criminal Investigation Division to compile the 2009 prisoner data file identified a lack of managerial oversight to ensure the accuracy and reliability of this file.

TIGTA recommended that the IRS work with the Treasury Department to seek legislation to extend the period of time the IRS has to disclose prisoner tax return data to the Federal Bureau of Prisons and state prison officials. TIGTA also recommended that the commissioner of the IRS’s Wage and Investment Division revise the annual report to provide Congress with a complete assessment of potential prisoner fraud. TIGTA said the IRS should ensure that all tax returns filed by prisoners are processed through the Electronic Fraud Detection System and receive a prisoner indicator. The report also recommended that the IRS revise prisoner filters to validate the wages and withholding associated with prisoners incarcerated for a year who filed tax returns claiming a refund. The IRS should also develop a process to assess the reliability (accuracy and completeness) of data received from federal and state prisons, TIGTA suggested.

The IRS agreed with two of TIGTA’s five recommendations and partially agreed with two recommendations. The IRS did not indicate its agreement or disagreement with one of the recommendations, on providing Congress with a complete assessment of potential prisoner fraud by revising the annual report to include the total number of tax returns filed by prisoners, number selected for fraud screening, and the number verified as false or fraudulent.

However, the IRS noted hat it would continue to report to Congress all of the prisoner information that is required to be reported by the Inmate Tax Fraud Prevention Act of 2008, such as the number of false and fraudulent returns associated with prisoner filings. In addition, the IRS said it would respond to future Congressional requests pertaining to prisoner- related fraud.

The new report is available here.

TIGTA issued a report last September saying the IRS needs to subject tax returns filed by prisoners to greater scrutiny for fraud. The report was largely about how expanded access to wage and withholding information could improve the identification of fraudulent tax returns, but it noted that the majority of tax returns the IRS identifies as being filed by prisoners are not being sent to screening to assess fraud potential.

TIGTA’s review identified 253,929 (88 percent) of the 287,918 tax returns filed by a prisoner as of March 24, 2010, were not selected for screening. Of those tax returns not screened, 48,887 individuals had no wage information reported to the IRS by employers.

These 48,887 prisoners claimed refunds totaling more than $130 million including Earned Income
Tax Credit claims of $78.5 million. Some of these refunds may have been stopped by other compliance activities. For example, TIGTA determined that the IRS prevented the issuance of nearly $18.1 million in EITC claims for 4,532 of the 48,887 prisoner tax returns.

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