Circular 230

To kind of go along with my last post, I wanted to inform everyone about the rules that the Internal Revenue Service has in place for all of the tax professionals out there. Each person who hires a tax firm, attorney or tax preparer to either resolve their tax issues or just prepare a tax return, should review to rules and regulations laid out in Circular 230.

Who does the Circular 230 apply to you might ask- anyone who gives out tax advice. Whether you are an Enrolled Agent, tax attorney, tax preparer or just happen to work in a tax resolution firm make sure the advice you give is correct to the best of your knowledge.

Any person can be sanctioned for several reasons by the Office of Professional Responsibility if he/she does any of the following:

1. Knowingly omits information and does not correct the taxpayer and inform them of the consequences
2.Exercise due diligence
3. Does not give accurate advice
4. Does not promptly submit documents to the IRS after they have been requested

And for many other reasons as well. Circular 230 lists out the consequences for not meeting the requirements listed, including disbarment or worse.

Every tax payer should no their rights- and every tax professional should understand their responsibility- not only to their clients- but also to the IRS.

Still waiting on that stimulus check?

Working in a tax resolution firm, I have seen it over and over again. People filed their 2007 tax return when they heard all the hype about the stimulus check. Day after day they rushed to their mailbox waiting to receive their $600 check (or more for couples and families). And then one day, they walk out to the mailbox and- BAM- they have a letter from the Internal Revenue Service stating that their check went toward their tax debt.



Basically, what happened was that these taxpayers who hadn't filed their tax returns for years and years were off the IRS radar and then when the 2007 return was filed- all of a sudden the IRS has a new address for them and finally had the ability to try to collect on the debt that had accrued- whether from the taxpayer's filed returns or from substitute returns filed by the IRS.

Whenever a taxpayer has a tax liability, all refunds received will be kept and applied toward their tax debt. The IRS even has the ability in some cases to levy state refunds as well.



If you think you are entitled to a stimulus check- its not too late! As long as you file your 2007 return and do not owe taxes- your money should find you shortly. However, if you find yourself with a letter from the IRS and the check inside is replaced by a nasty letter, don't wait. Call the most trusted resolution firm in the industry to handle your liability and know that you are well represented before the IRS.

Is the IRS predisposed again Offers in Compromise?

It seems that they are- but why? Sometimes an Offer in Compromise is really the best choice for both the taxpayer and the IRS. If the taxpayer submits an OIC, he/she is more likely to remain compliant since future compliance is a prerequisite to getting an offer accepted.



What is future compliance? For a self-employed individual, he/she must be current with their estimated tax payments. For a wage-earner, they must be withholding the proper amount. Also, the taxpayer must remain compliant and must file all returns and if there is a balance it must be paid- FOR FIVE YEARS! If not, you will default the offer and the IRS will collect on the original amount owed, plus penalties and interest. (There are many other requirements as well).



Also, recent studies show that most of the Offers that were rejected by the IRS ended up becoming Currently Non-Collectible, which means that instead of collecting a lump sum payment or a monthly payment amount, the taxpayer does not pay any funds until his or her financial situation changes (if it ever does). SO- technically a good portion of OIC rejects end up never paying anything at all on there tax liability. Seems like something- even a settlement offer- would be better than nothing, doesn't it!?!

One thing is certain- Offers in Compromises are not easy solutions to tax liabilities but for some people is might be the BEST solution. The important thing is to just be sure that you trust whoever is advising you on how to handle your tax debt. Some firms offer pennies on the dollar solutions to draw people in. Then, they take their money, file frivolous offers and keep their money. The IRS is cracking down on so-called "offer mills" in order to protect the taxpayer. However, there are some reputable tax firms out their which promise to find the right fit for each individual. Just make sure you make the right choice.

Great Sites

I wanted to share this information because I thought it was important to see the different perspectives being offered.

Enrolled Agents
TaxConsultant4U
IRS Mind

Tax Preparer
BabyBoomer11852
Tax Advisor4/Tax Preparation

Resolution
Taxes and You

Tax Consultant
TaxFacts4U
Tax-Thoughts


It's great to check out the different perspectives from which each one of these people write their articles.

I have learned a lot from the information that each one of these indivduals has published. I hope you find them just as informative as I have.