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What is an Income Tax Penalty and How Will it Affect You?

What is an Income Tax Penalty and How Will it Affect You?

If you work then you have a legal responsibility to pay income taxes on a yearly basis. It is advisable for you to file and pay your taxes when they come due. If you are unable to do this then you will likely be assessed an income tax penalty. You will receive a statement or notice from the IRS informing you of the IRS income tax penalties and interest associated. If you have questions concerning your notice then it would be good for you to seek the services of a qualified tax attorney.

Understanding Income Tax Penalties

The penalty will not only include the current amount owed, it will also include interest applied to the amount as well. If you can’t pay by the due date then expect an income tax penalty to be filed against you. Even if you or your tax attorney has filed for an extension, you will still be penalized with interest charges on your balance. The amount of interest is determined by the amount you owe, the federal short term rate and an additional penalty of three percent.

Fines, Penalties, and Interest

You will also be given additional IRS penalties and interest for late, negligent or failure to file tax returns. These are also subjected to an income tax penalty with interest. The interest rate will accrue from the date of your return and will compound rather quickly. When you are late in filing your tax return and in making any payments, you will be charged an interest rate of 0.5% on a monthly basis. The amount maximum is 25% of the balance owed and is applicable to all money that is owed.

Your tax attorney will explain that you are also liable for an income tax penalty if you file a late return. Again, the penalty rate is 5% of the outstanding balance and is charged on a monthly basis. Unless you can prove that you have exigent circumstances and are not able to pay the amount you owe. In that case, you can possibly have your tax debt forgiven or reduced. If you give the information to your tax attorney, they can present this evidence to the IRS and negotiate the matter for you personally.

Did you overpay or underpay?

There is also an IRS underpayment penalty for underpaying your income taxes. The income tax penalty for this type of situation is called a failure-to-pay penalty. It applies as a penalty from the date that the balance was underpaid and like the other fines it accrues and builds on a monthly basis. Each IRS payment is subject to different penalties, so you may still be responsible for penalties on an earlier payment as well. Even if you believe you paid the amount. Or even if you have a refund coming, you may still incur a penalty. Your tax attorney will assist you and figure out any amount that is due and what you are responsible for.

You are important to us

If you do not have enough money to pay for the penalty, then you can ask your tax attorney what your options may be. One option would be for your tax attorney to file what’s called a waiver. A waiver may be granted to you on the grounds of financial hardship, or some other unfortunate situation you may have incurred. If you cannot pay the income tax penalty, then your tax attorney can help you determine which route would be best for you. In the case of an elderly person aged 62 or older, they are eligible for a waiver based upon a disability or any other reasonable cause. Your tax attorney is there to hold your hand and walk you through all of your options, so rest assured your best interests are being looked after.…

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Tax Help FAQ: Are Conversations With My Tax Attorney or Accountant Privileged and Confidential?

Tax Help FAQ: Are Conversations With My Tax Attorney or Accountant Privileged and Confidential?

A question that certainly many taxpayers ponder when considering seeking expert tax help. If should be no wonder that when it comes to taxes, the law regarding confidential and privileged information is rather complex. Read on to find out what kind of information is considered confidential.

A: There is no simple answer to this question. Certainly whether communications with your accountant are privileged or not may be at the heart of any court proceedings or hearings before the IRS. Some states recognize an accountant-client privilege while others do not. The federal government does not recognize a general accountant-client privilege.

Keep in mind that communication with your lawyer is always privileged and protected. This is one advantage to having a tax attorney rather than an accountant represent you before the IRS. The federally authorized Tax Practitioner Privilege law contained in the Internal Revenue Code provides that conversations between a taxpayer and a federally authorized tax practitioner are privileged as long as they took place between a taxpayer and his or her attorney. This exception is limited to federal tax proceedings and only to conversations with an attorney, CPA, enrolled agent, or enrolled actuary, not tax preparers or anyone else.

If you owe back taxes or need tax relief for other IRS problems, be aware that even where the privilege is recognized, there are exceptions. The privilege may be waived by even inadvertent disclosure to third parties or inclusion on a tax return. And you may have to disclose otherwise privileged communications if you end up suing your CPA.

If you would like to establish privileged communications regarding your tax issue, your safest route is to use a tax attorney to establish the well-recognized attorney-client privilege. If your attorney then contacts an accountant to help interpret or understand your financial situation, the communications between them will be privileged as well, as long as they are not disclosed to a third party, which will break the privilege. However accounting advice given by your attorney, or the simple preparation of a tax return by your attorney, will not be privileged.

As you can see, the law regarding privileged and confidential conversations with tax attorneys and accountants is rather complex. We recommended that those who need IRS help with back taxes, consult a Certified Tax Resolution Specialist.

Our Tax Relief FAQs section contains many more tax help tips, so check it out. Or refer to our archive of tax help articles and tax help blog, which are great resources for staying informed on the latest IRS news and offer tax relief advice for resolving debt with IRS tax relief options like the offer in compromise, IRS payment plans, and IRS audit resolution.

The Tax Help Glossary is a great tool if you’re one of many taxpayers out there who is struggling to understand the complex IRS terminology. Don’t let IRS jargon stop you from settling your IRS debt and permanently achieve your tax resolution.…

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Check Out the Ways to Stop Divorce and Save the Marriage

Check Out the Ways to Stop Divorce and Save the Marriage

Are you really wondering what the future of your marriage is going to be? Are you fighting almost every other day and don’t know what to do about it? Whether or not your marriage is leading to a divorce is only your concern and the concern of your partner. If you guys cannot do much about it, just forget about it, because in that case nobody can also do anything much about it. If you are really looking at preventing huge crisis in your relationship, then you have got to take to reading this, because here are some ways to stop divorce and live a happy married life.

o Eliminate any kind of distance among the both of you. Remember that the more distant you are from your partner, the more close you are to divorce. It is a good idea to be close physically, mentally and emotionally. This is a good way to see to it that you are saving your relationship. Also, only if the both of you want to do something about it, you have got to maintain this closeness. Most often, only one of the two in a marriage wants to save the marriage, in that case nothing much is likely to the outcome of it.

o Next important thing you guys have to review is the commitment factor. Commitment I something that comes from within, the more you stress on it, the more it might become a burden. Only when it is internalized will it be of some use. You guys have to review commitments and strengthen them much more. Even of you partner does not seem all that committed, encourage the commitment and see how your relationship grows.

o Communication is the next important thing. We all know communication is almost not even present among people who are heading towards a divorce. It is important for you to see to it that you communicate all what is in your mind and also exchange as much as possible. This also gets you farther away from a divorce. A large part of communication is to listen. Listen and pay attention to what is in the other person’s mind as well; this will create a good amount of rapport among you and reduce chances of a divorce.

o The next thing you have keep in mind is that all your talks, discussions, need to be solution oriented, only then will you able to get the best solution and live a happy life thereafter,…

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Tax Attorneys – Vital to Tax Issues

Tax Attorneys – Vital to Tax Issues

Inside of the technique of attorneys are wide and varied areas, quite a few tend to be more extravagant in comparison with other folks, as well as a great deal more lucrative as compared to other people. It has at all times happen to be recognized the fact that undertaking corporate and business legislation is actually financially eye-catching, but not only because of the level of difficulty, but since the device necessitates economical understanding, that certainly not all attorneys possess. One particular area that is significantly less popular but sometimes develops into an extremely cost-effective, if perhaps emphasized, is criminal law. Independence is definitely invaluable, and also exactly what a client would like to spend for to secure a beneficial situation cause a felony litigation that can symbolize significant chunks of cash.

Then there are definitely the tax attorneys. The idea claims that there are 2 factors inescapable in life and those are taxes and death. And also to the actual magnitude in which income improve, so does taxes. And so does indeed the significance of becoming strongly advised in this region, a consulting service which is not restricted to lawful legislation. In this genuine architectural tax road in addition auditors take part as well as various other specialized accounting firms.

Normally, legal professionals impose their particular service fees on 2 bases- predetermined, which consequently on many occasions is incurred for the several hours of labor that needs an interest, and also a foundation which might include things diverse. By way of example, a portion associated with complete monetary procedure. Tax attorneys demand a set basic, and also the basic adjustable that is exchanged in each and every specific situation offers that a portion of the sum that matches in order to save attorney’s tax fees. The smaller amount taxes are compensated, the more expensive the client, as well as the tax attorney.

As being a field of expertise in tax law happens to be progressively crucial, it seems to have improved the availability of learners to examine even more the legislations in addition to preparing components. There are a lot of tax attorneys that are effectively geared up when it comes to research, however ultimately turn out to be an authority in preparing and tax lawsuit. It is recommended to be effective in the region, because the device demands a great deal know-how and understanding that go over and above what exactly is lawful. There are firms and operating tax attorneys or CPAs furthermore perform numerous audits, to be able to supply tax preparation concerning income benefits in that way. After that, in the event the IRS runs and doubts that preparation, say hello to the trial attorneys, who are also IRS tax attorneys.…

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Tax Problems for Small Business and Self Employed

Tax Problems for Small Business and Self Employed

A small business is often a target with the IRS. Should you owe the IRS delinquent income taxes, have payroll tax problems or have unfiled tax returns, A revenue officer is capable of showing up at your business or doorstep unannounced. They will not waste time when requesting information about your firm income and personal finances. In the event you find yourself within this situation, ask the IRS revenue officer to allow you time to get your financial information together. In case you may have do not have your records and will need account statements or tax returns for previous years, get in touch with the IRS and ask for account or tax return transcripts.

Should you have unfiled tax returns that need to be processed, ask for wage and earnings transcripts. An account transcript will list adjustments you or the IRS created after your tax return was filed. A tax return transcript list line items from your return as initially filed. A wage and income transcript list W2 wage information, 1099 earnings, retirement distribution revenue, stock sales, bank and mortgage interest paid. Wage and income transcripts can be utilized to prepare unfiled tax returns up to ten years.

In the occasion you get an IRS notice showing back taxes owed and need to communicate together with the IRS prior to them showing up at your business or home, attempt calling the number on the notice as soon as possible or get a professional tax advisor to deal with your tax problem. Should you be unable to resolve your tax issue with an IRS employee or revenue officer and need representation, attempt contacting a CPA, Enrolled Agent (EA) or Tax Attorney in more serious situations. For anyone who is self-employed and now owe back taxes to the IRS, you may expect many notices such as wage and bank levy notices and tax lien notices until you pay the delinquent income taxes. Should you ignore these tax notices, you could be facing a wage levy or garnishments, bank account levy and asset seizures or maybe a federal tax lien on real estate assets. The IRS may also intercept income owed to you for products and services.

You can find quite a few alternatives when working with the IRS on your tax problem. Depending on your financial situations, you may negotiate a payment plan to pay off your tax debt. You can also amend tax returns prepared by the IRS to get many of your important deductions permitted to self employed tax payers. In the occasion the IRS files your return, they might only file fundamental deductions and overlook the many expenditures of the company. They may also overlook the cost of trade sales and only bill you for revenue received.

There are other possibilities made available if taxpayers are experiencing financial hardship including an offer-in-compromise or non-collectible status until your circumstance improves.…

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Need Tax Help? If You Owe the IRS, Don’t Make These 7 Serious Mistakes

Need Tax Help? If You Owe the IRS, Don’t Make These 7 Serious Mistakes

Maybe you’ve received a letter of intent to levy from the IRS. Perhaps you received a call or visit from an IRS revenue officer. While the circumstances may be slightly different, if you’re in need of tax help, you’re not alone.

There are others like you who are concerned that their wages or bank account could be subject to an IRS tax levy. For others, jail time is a real concern. Regardless of your situation, a tax attorney may be able to provide crucial guidance to get you through this trying financial situation.

While working with a tax attorney won’t make your IRS tax situation disappear, it will help give you peace of mind that finding a solution is possible. Plus, it may keep you from making some basic mistakes that could have dire consequences for your future.

If You Have an IRS Problem, Don’t Make These 7 Mistakes

• Do not ignore the situation – The best time to act on any correspondence from the IRS is now. If you’ve received a letter of collection action from the IRS, it’s not going to go away. Eventually it will give way to letters threatening an IRS tax levy, tax lien and possibly a seizure of your bank account, wages, home, car or other property. Open all mail from the IRS immediately. Also, if the postman leaves a pink slip stating that you have certified correspondence from the IRS that you must pick up at the post office, make sure that you retrieve it as soon as you can. Many IRS letters require that you take action within a certain amount of time stated in the letter. If you fail to pick up and open your mail you may miss a deadline for appealing a levy action that the IRS is planning on taking.

• Do not fraudulently conceal assets – Don’t make a bad situation worse. Tax debt problems can usually be worked out with the help of a professional, no matter what your personal situation is. Not being able to pay your taxes, in and of itself, is not a crime, but trying to remedy the situation by fraudulently concealing assets is.

• Do not talk to IRS representatives- There is no legal requirement for you to talk to IRS representatives. This even applies to an IRS Revenue Officer who may just show up at your home or place of business and catch you off-guard. The IRS is trying to collect money. IRS representatives are not your friends and they know more than you do about the tax laws. If you are contacted by the IRS obtain representation immediately to protect your rights.

• Do not take advice from the IRS- The IRS Collection Division only exists to collect tax money. They will do what they have to in order to accomplish that. They do not exist to help you or give you advice about what’s best for you. It is best to obtain a knowledgeable attorney who you can consult with to determine what legal strategies would be most helpful to you.

• Do not fail to appeal a final notice of levy- The IRS, in most instances, must give you notice that they are going to seize your money or property. You have appeal rights that will prevent the IRS from doing so. All appeals requests have deadlines. If you fail to appeal you may be giving up the best remedy that you have.

• Do not fail to file your tax returns – It is not a federal crime to merely fall behind on paying your taxes. However, it is a federal crime to fail to file your tax returns. Make sure you get all of your delinquent returns filed immediately. You should also know that the IRS will not negotiate tax debt remedies with a taxpayer who has not filed all of their tax returns.

• Do not try to go it alone – No matter who you are or what your background is, you are no match for the IRS Collection Division. The IRS relies on intimidation through the threatened use of their numerous legal powers. While choosing not to work with an attorney may seem like the cheaper alternative in the short-term, an attorney can most likely save you a lot of money and legal hassle in the long-term. An attorney may save you an amount in taxes, penalties and interest that greatly exceeds his or her fees. Not only that, an attorney may just save your business, your livelihood or your home.

Whether you’re either an individual or a business owner, who simply got behind on your taxes and needs an experienced representative to negotiate on your behalf, …

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Spiritual Growth Experienced As Freedom in Prison

Spiritual Growth Experienced As Freedom in Prison

As a yoga practitioner and teacher for the last 20 years, I had a traumatic experience recently that I never expected to have to go through in my lifetime. As the result of a convoluted series of misunderstandings, I found myself spending a week in jail.

The challenges of being imprisoned are many and overwhelming. Without getting into too much detail about these challenges, my sanity depended on where my mind was at. Initial feelings of anger, helplessness and “why me” completely dragged me down in an emotional spiral. I felt weak from not eating which decreased my energy levels. I felt my imprisonment aged me and when I looked at my reflection in the scratched, dull mirror, I barely recognized myself. To continue with these feelings of absolute despair would have dragged me down into the depths of depression I had experienced as a child. However, I have acquired spiritual tools and armor throughout my years of yoga practice and have become a warrior refusing to allow myself to go to the dark side!

I had to create and be my own spiritual sanctuary of love and respect for myself and the other female inmates I was cohabiting with or else I would drown in the sorrow and harshness that was felt all around in jail. The other inmates were suffering their own trauma and the correctional officers are basically imprisoned themselves. There was anger and fear surrounding me on all sides. I had to strengthen my relationship with myself, my mind and with God through my practice. Because that is all I had to rely on. When I strengthened these relationships, the shift in energy is profound. Its truly shocking how immediately we can change our reality by re-wiring our brain. In a place of constant noise, cussing, anger, stress, fear, shame and aggressiveness, I created a place of beauty, respect and integrity through my yoga practice.

When we were allowed to go outside to the “yard” for a half hour to one hour a day (and not every day!) I went to a corner to practice yogasana. It didn’t take long for the some of the other women to come over and ask me what I was doing. They said they had heard of yoga before but have never seen it or try it. Could they, they asked me. I was beyond joy when they asked me because my passion is teaching yoga! Its what I have been doing for the last 13 years! Soon I was teaching yoga again! Simple postures with extraordinary results. For me, I felt alive again, exhilarated and impassioned, sharing the gift of yoga with other women who felt as desperate as I had been feeling. It only took a few movements and controlled breathing for these women to feel the effects and benefits of the practice.

The next day they told me how good they felt and where they were feeling sore. There was more gentle communication among us, more smiles and laughter. I had made some friends and gained some respect in prison. I no longer felt as threatened as I had before. I felt joyful to be able to share this beautiful transformative practice in such a boring and harsh environment. The seeds of a spiritual practice had been planted and the goodness continued to grow. The macrocosm within the microcosm expands and the sun shone from within us. Like a smile, the contagion of spirituality results in utter freedom from a contracted mind and heart. We were creating our own freedom and our own light!…