Posts from August 2017.

Where individuals and businesses owe IRS taxes, the IRS has a settlement program where it can legally accept less than what is owed. Known as an "Offer in Compromise," Congress has given the IRS the authority to "compromise" and reduce a tax debt owed to it, but only under very specific terms. The IRS does not have other programs or alternatives where it can accept less tax than what is owed - only the Offer in Compromise.

The IRS Offer in Compromise program has been in effect for many years, but the program has changed. Many individuals and businesses file their own Offers in Compromise with ...

A recent Tax Court decision suggests that employers may want to review their 401(k) plan loan programs and payroll practices. In Louelia Salomon Frias and Mervyngil Salomon v. Commissioner, TC Memo 2017-139 (July 11, 2017), the Tax Court held that an employee on maternity leave: (1) defaulted on her 401(k) plan loan; (2) failed to cure the default within the applicable cure period; and (3) as a result, there was a "deemed distribution" of the outstanding balance of the loan plus accrued interest which was taxable to the employee.

As described below, the loan default language in the ...

If an individual or business owes federal taxes and does not have the current ability to pay these taxes, the IRS can consider placing the account into "currently not collectible" (CNC) status. If placed in CNC status, a taxpayer is not required to make a current payment on the unpaid taxes to the IRS, and the IRS will also not "levy" or "garnish" wages or seize bank accounts while an account is in CNC status.

Before the IRS will consider placing a taxpayer's account into CNC status, the individual or business must be up-to-date or "current" with the filing of their required tax returns, and ...

The South Carolina Infrastructure and Economic Development Reform Act, 2017 Act 40, was recently enacted and is designed to enhance South Carolina's economic competitiveness. The Act, commonly referred to as the gas tax bill, increased the South Carolina gas tax to pay for infrastructure improvements. In addition, the Act provided several tax credits and incentives, including a new property tax exemption for manufacturers.

The Act provides an exemption equal to 14.2857% of the property tax value of manufacturing property. S.C. Code § 12-37-220(B)(52)(a). The exemption is ...

If an individual or business owes federal taxes and does not have the current ability to pay these taxes, the IRS can "seller-finance" and offer a payment plan with the taxpayer. The primary benefit of a payment plan is that it provides a clear agreement with the IRS on how much is to be paid and over what time period. Also, and as an inducement to enter into a payment plan with the IRS, the IRS will reduce the amount of penalties that will be due. The IRS will not "levy" or "garnish" wages or seize bank accounts while a payment plan is in effect.

Before the IRS will consider a payment plan for back ...

The United States has a voluntary income tax reporting system. U.S. citizens, permanent residents, and businesses here must annually file income tax returns with the IRS, reporting their "worldwide income," deductions, and their "net taxable income," and pay income taxes to the IRS based on this amount. The rate of tax is "progressive;" that is, it increases as taxable income goes up. There is a minimum level of income for which an annual tax return is not required to be filed and which varies on filing status. For example, in 2016 for a single (unmarried) taxpayer, the individual must ...

Many individuals and businesses owe taxes to the IRS, or they have not filed their tax returns or both. While the IRS may be the most powerful creditor in the world, there are solutions. This is Part I of a series addressing the most common issues faced by taxpayers owing taxes, and what can be done. The following is a list of each blog topic, and which also includes topics on IRS Tax Audits, and also IRS Criminal Tax Investigations, as this is where tax debts with the IRS can often arise as well:

  • Unfiled Tax Returns (Part II)
  • Payment Plans (Part III)
  • Currently Not Collectible Status (Part IV)
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