“Hasta La Vista, Baby”, That’s What CSED About IRS Collection

The IRS is the greatest collection agency in the world. It’s charged with collecting billions and billions of dollars in tax each year. Although it may seem like the Service makes its own rules, there are laws that protect taxpayers from the long arm of the IRS Collection Division. One law the IRS must adhere to is the ten-year collection statute. This law is like our very own Terminator, sent here to protect from the big, bad IRS. So by default, that makes the IRS the T-1000, that scary creature from “Terminator 2: Judgment Day,” made of molten metal, dressed like a cop, constantly changing shape and the rules of the game, always seeming to outrun and outlast the good guys. Now, this isn’t a James Cameron fantasy. We know we can’t stop the T-1000 / IRS, we can only hope to contain it. Our safest bet is to play by the rules of tax compliance and do what we can to make the IRS play nice. That said, I’m glad the Terminator (the ten-year collection statute) is on our side.

But I digress. The IRS typically has ten years to collect a back tax debt, with the last day to collect the liability being called the Collection Statute Expiration Date (CSED). Internal Revenue Manual 5.1.19.1 states that “each tax assessment has a CSED. Internal Revenue Code section 6502 provides that the length of the period for collection after assessment of a tax liability is ten years. The collection statute expiration ends the government’s right to pursue collection of a liability.”

“Pursue” is a key word in the IRS statement above. A little known fact is that although the IRS is not allowed to pursue the tax liability after the CSED has expired, it may still apply funds to the liability should the Service get its hands on them. For example, the IRS may apply an overpayment to a back tax debt that is past the CSED.

Certain actions extend the CSED, suspending it for a length of time. These actions include submitting an Offer in Compromise, filing for bankruptcy, submitting certain Appeals, Pending Installment Agreement status, litigation with the IRS, a Taxpayer Assistance Order, military deferment and other items. Essentially, if the IRS is prevented from collecting the tax, the CSED will most likely be put on hold. You can see why the CSED may play a role in how you and the IRS resolve your back tax debt.

The CSED and other important facts, such as your age, health and education, may play a role in whether or not the IRS will accept your Offer in Compromise. If you have a lot of years left on your CSED, you’re relatively young, healthy and educated, the IRS may just reject your Offer with the belief that your earning potential will increase allowing you to full pay in the tax debt within the CSED. In other words, you’re broke now, but you may not be in a couple of years.

Your Installment Agreement may also be affected by the CSED. A case in which the IRS would usually allow a taxpayer to pay a tax debt monthly over 72 months may have to be collected in less time, significantly increasing the monthly payment amount. The CSED could also influence your decision to commit to any action that would extent the time the IRS has to collect. I hope you enjoyed this blog. I’ll be back…

If you want more information about how the IRS’ Collection Statute Expiration Date may affect you, contact M&M. We specialize in resolving business and personal tax liabilities. Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.

No Grey Area: The Fifty Shades (and counting) of Successful Business Systems

If you’re a woman between the ages of say, 18 and 100, chances are you’ve read about Anastasia Steele and Christian Grey. (That is one, um, colorful relationship. I may need to get out more.) And if you’re a business owner, you’ve probably read what seems like every book under the moon on how to operate a successful business. So many hundreds of millions of words have been written on capturing this storied part of the American Dream, that it can be hard to distinguish “How to Operate a Cash Register for Dummies” to “Do This And You’ll Be Rich,” by Wharton Business School’s latest whiz kid. Although most books we read at M&M don’t apply directly to our services, we usually find something in most of them that will help us, making each of them worth the read or at least a quick scan.

Let’s say you’ve read all the books on business and have all that impressive information processed and locked in your steel trap mind. Now that you have all of the knowledge and knowhow to make your business successful, where do you find the time to apply your genius and still have a personal life? It’s tough to be the salesman, bookkeeper, laborer, marketer, purchaser, manager, spouse, parent, and everything else simultaneously. Sure, you can keep the pace up for a little while, but not forever. This seems to be where a lot of small businesses fail before they really get going.

Many of us start businesses because we are great at the service we provide, or because we make a great product, or maybe both. But passing this knowledge and skill on to employees can be difficult and frustrating, for you and them. Once you have an employee who can produce your results, you’ll have time to move on to more important tasks within your business. Trusting your employees to do this can be easier said than done, unless you have the right systems in place. And if you do, everything becomes easier.

If you have an easy-to-follow system in place as to how to perform each task in your operation, your company will flourish. You’ll be happy because of your employees are more productive, which means you might not have to work every weekend…Imagine that! Your employees will also feel stronger senses of autonomy and ownership, as their contributions become more meaningful. Losing an employee will also not be as big of a hit, because training new employees will be an easier process. Quality control and quality assurance will also become more streamlined. When your business is hectic, it will run smoothly. You will have more free time for your personal life. The positives are endless with the right systems in place.

Just as important as the system itself is the way in which you communicate it to your employees. For example, anyone can make a generic peanut butter and jelly sandwich. But if you want someone to make a PB&J just the way you like it, you’d better give some very specific directions. The same is true for your business. Give your employees specific directions to your PB&J system and you’ll get the perfect sandwich every time. We all know consistency is a key to business longevity. Without your system in place, you’ll have employees making your PB&J the way they like it. Another essential part of any good system is a Quality Control check. A simple checklist carried out by another employee will work very well in most cases.

Such a system can also be important to staying out of tax troubles. (I’ll also assume that since you’re reading this blog, you probably need help resolving your IRS and/or State back tax debt.) It may even help to prevent embezzlement and other similar issues, which often leads to tax debt. Whether you calculate and pay your taxes in-house or use a payroll company/accounting service to make your tax payments, a system is essential to mistake free tax compliance. Incorporating a system to pay and verify your tax payments is a wise choice. If you are in a formal Installment Agreement to pay your back tax debt to the IRS or State, a system will help limit the chance of default, saving you money, time, frustration and possibly your livelihood. The IRS and State taxing authorities don’t like to give second chances at monthly payment plans. Neither does Christian Grey. At least not until the second book.

M&M has perfected a unique tax resolution system that allows us to work within the strict guidelines set by the IRS and State taxing authorities to resolve our client’s tax liabilities. The pictures above show resolutions to IRS debts our tax teams have recently secured for a Virginia client and an Illinois client, each a small business. Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.

I’ll Take A Royale With Cheese, Payroll Tax Debt On The Side

Running a small business today is more difficult than ever. If you own and operate a burger joint, building the perfect burger won’t guarantee long term success. You must also to be a trusted leader, an understanding manager, a meticulous bookkeeper, a marketing genius, a skilled negotiator, a tech expert, a slick salesman, and of course a tax collector. If you have employees, it is your responsibility to collect your employee’s payroll tax and hand it over to the IRS (and most states) in a timely fashion.

When your tasty burger isn’t flying off the grill as fast as it once did and you’re scrambling to make ends meet, borrowing money from your employees payroll tax looks tempting. As we’ve heard from our clients time and time again, one missed employment tax deposit snowballs into thousands of dollars of tax debt. That’s a lot of hamburgers.

If you do find yourself in the midst of a payroll tax debt, the first priority in getting on the road to recovery is making current employment tax deposits. The IRS and state taxing authorities won’t even consider granting a resolution to your back payroll tax debt, unless you can prove to be solvent by making current employment tax deposits. The IRS sees no use in getting money for the back tax debt, if a business continues to accrue new liabilities. The Service would rather get medieval, like Marsellus Wallace, and shut a business down that continues to neglect its payroll tax responsibilities.

Today the IRS requires employment tax deposits to be made via the Electronic Federal Tax Payment System (EFTPS). It is easy to register and convenient to use. You no longer need to leave your office to make your tax deposits. They can be scheduled online or by telephone. It is a good practice to schedule tax deposits through EFTPS at least one business day before they are due, as your EFTPS transaction will not automatically process the same day it is scheduled. Late employment tax deposits lead to hefty penalties from the IRS, a topic we’ll cover in future blogs.

Generally employment tax deposits are required to be made monthly or semiweekly, depending on the employers four-quarter Lookback Period. The Lookback period begins July 1 and ends June 30. This means that your tax deposit requirements for 2012 were determined by your Lookback Period beginning July 2010 and ending June 2011. IRS Notice 931 Deposit Requirements for Employment Taxes states “If the employer reported $50,000 or less of Form 941 taxes for the lookback period, you are a monthly schedule depositor; if you reported more than $50,000, you are a semiweekly schedule depositor.”

Monthly depositors are required to deposit accumulated taxes on payments made during a calendar month by the 15th day of the following month. So August 2012 employment tax deposit will be due September 15, 2012 for employers following the Monthly Deposit Schedule. Semiweekly depositors need to make a deposit following each payroll payment according to the schedule below, taken directly from IRS Notice 931.

Deposit Period (Payment Days)                                     Deposit By

Wednesday, Thursday, and/or Friday                            Following Wednesday
Saturday, Sunday, Monday, and/or Tuesday                  Following Friday

M&M recommends following the Semiweekly Deposit Schedule whether your business is required to or not. It seems to be much easier for our clients to stay on track and remain compliant this way. Funds meant for employment tax deposits have a funny way of allocating themselves to other operating expenses when deposits are only made once per month, in a relatively larger lump sum.

There are more rules regarding the deposit requirements for employment taxes. Every employer should be familiar with IRS notice 931. Follow M&M Financial on Facebook and Twitter @MMFinancial for employment tax deposit reminders.

M&M Financial specializes in resolving business and personal tax liabilities stemming from delinquent 941 payroll tax. We have perfected a unique tax resolution system that allows us to work within the strict guidelines set by the IRS and State taxing authorities, ensuring the best possible results for our clients.  Find a few of our successful client case resolutions here.

Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.

10 Reasons To Hire M&M Financial For Your Back Tax Resolution

1. Reputation – M&M is accredited by the Chicago Better Business Bureau, and proudly boasts an A+ rating.

2. Clear-Cut Fees – M&M charges a start-to-finish fee, with no hidden costs or hourly rates. We’ll base your fee on the details of your specific case, and tell you your complete cost up-front.

3. Payment Options – If it’s flexibility you need, we’ll allow you to pay our fee in three equal monthly installments. This lets you to see your case progress toward resolution before your fee is paid in full.

4. We Fix Tax Problems – At M&M we specialize exclusively in tax liability resolution. Each of our tax teams is headed by a licensed tax professional trained in M&M’s Tax Resolution System. M&M’s tax teams are in-house, assuring accountability. This work is all we do, and we do it well.

5. Experience – M&M began helping taxpayers in 2005. We have more than 30 years of combined tax resolution experience. Put our knowledge and skill to work for you.

6. Superior Skill – As members of various accredited tax organizations nationwide, you can be certain that your M&M Tax Team is held to a high standard of ethics, knowledge and professionalism. All of our tax professionals are trained in M&M’s Tax Resolution System, and are required to complete continuing professional education that meets or exceeds regulatory standards.

7. Honest Advice – We realize you’ve been flooded by numerous tax firms promising the world. But now is not the time to be sold empty promises. M&M will advise you of your options to resolve your tax liabilities for good, shedding light on both the positive and negative elements of your case. Next, we’ll outline a strategy specific to your circumstances and implement the plan step by step.

8. Owner-Operated – Both Mark Mitchell and Mason Bowman take active rolls in the day-to-day operations of M&M, including client representation. We offer superior service that ensures commitment and results.

9. No Risk – Cancel your M&M agreement within two days of engaging us, and you will receive a full refund.

10. The Perfect Size Matters – M&M is a boutique firm, specializing in the niche area of tax resolution. Our manageable size ensures that our clients will always command our full attention. You won’t become a number at M&M.

Risky Business: Choosing the Right Tax Resolution Firm

If you’re reading this blog, chances are you need help resolving a back tax liability. It’s also safe to assume that you’re feeling the pressure of Uncle Sam breathing down your neck, demanding payment. And you may already be wading through the murky waters of the hundreds of Tax Resolution companies that seem to be everywhere these days. Are you looking for a firm that will solve your tax problems without robbing you blind? Unfortunately, many consumers (some of whom became happy M&M clients after being taken advantage of by some of our less scrupulous competitors) are hoodwinked by unrealistic promises and outright lies, told by skilled salespeople with shortfalls of conscience and decency.

In spite of these bad apples, the Tax Resolution industry has become immensely popular. There has been a stampede of companies into the industry from the debt consolidation industry. Why is that? Because recent Federal Trade Commission rule revisions have finally regulated that decidedly shady industry. We’ve even heard of a lending company that is trying its hand at tax resolution since the housing bubble burst. Further, these companies typically have big marketing budgets and attorneys on staff, making the jump to tax resolution an easy one. I like to call them “instant” tax resolution firms. Just add hot water.

However, this isn’t a recipe for longevity. They’ll simply make a quick buck and move on to the next big thing. Many of these companies spend a fortune getting new clients in the door, and worry about how to actually resolve their tax dilemmas after the fact. Aside from the obvious problems with these chameleon companies, there is another issue that many companies and the attorneys that work for them have either ignored or overlooked.

The American Bar Association (ABA) and many individual state’s bar associations have professional rules of conduct, or ethical guidelines that attorneys must follow. The ABA, in Rule 7.3 Direct Contact With Prospective Clients, section (a), states “a lawyer shall not by in-person, live telephone or real-time electronic contact solicit professional employment from a prospective client when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain…”

The Colorado Bar Association, Oregon State Bar Association, and Illinois’ Attorney Registration and Disciplinary Commission have identical language in their Professional Rules of Conduct. The State Bar of California, in Rule 1-400 Advertising and Solicitation section (C), states “a solicitation shall not be made by or on behalf of a member or law firm to a prospective client with whom the member or law firm has no family or prior professional relationship…” It seems to me that many of the attorneys at these shady companies are walking a fine line, and inviting disciplinary action.

The ABA’s rules of professional conduct go on to say, “Every written, recorded or electronic communication from a lawyer soliciting professional employment from a prospective client known to be in need of legal services in a particular matter shall include the words “Advertising Material” on the outside envelope, if any, and at the beginning and ending of any recorded or electronic communication…” All of the state bar association rules that we’ve researched have similar wording in their rules of professional conduct.
Many tax resolution firms directly solicit prospective clients. This may include direct mail and phone calls. Obviously, many of these companies shouldn’t be doing it. And not only are they doing it, but many are doing it deceitfully.

Let me explain. The IRS is intimidating to a lot of people. Unscrupulous companies know this and use it to their advantage, preying on people going through a difficult time. A perfect example is the solicitation shown here from just such a company. This letter was sent to an M&M client. It is meant to look very similar to an official IRS notice, which often prompts a delinquent taxpayer to call the number on the solicitation.

This leads to the logical next question for you, the taxpayer looking for help. Who do I want to represent me in this crucial matter in my life? Or, perhaps more importantly, who don’t I want to represent me? It’s logical to believe that an attorney, who breaks the rules of professional conduct of his own profession, would have no problem breaking other ethical rules in regards to tax resolution, client fees and promises of specific outcomes. This type of attorney may even make your situation much worse.

If you have received a direct solicitation from a tax resolution company, find out if it has attorneys on staff. This may be your first clue that you are talking to a dishonest firm, or at the very least one that isn’t familiar with the basic rules its attorneys must follow. Before you hire a tax resolution firm, check into them. Ask the company pointed questions. If what you hear seems too good to be true, it probably is. Check the Better Business Bureau. Call references. Check a company’s length of time in business. Make sure the company you hire is the right size for you. Some people feel more comfortable with a large business, others like the familiarity of a smaller business. But ultimately, of course, the smart money is on hiring M&M. Check us out. We can help. Call us today.

Also, it is important to remember that you don’t need an attorney to represent you when you owe taxes. Remember from our previous post on the History of EAs, an Enrolled Agent from M&M is trained specifically to resolve back tax liabilities and has unlimited practice rights before the IRS, granted by the United States Treasury. Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.

Holy Batman Forever! Iceman Had Tax Liens?

Val Kilmer is best known to most filmgoers as either “Iceman,” Tom Cruise’s cocky nemesis in Tony Scott’s Top Gun, or from his iconic and uncanny is-it-live-or-is-it-Memorex channeling of Jim Morrison in Oliver Stone’s The Doors. And I have to praise Val as well for his turn a gun-toting bank robber extraordinaire in Michael Mann’s crime masterpiece Heat. But for my money, no Kilmer character is more seminal than Nick Rivers in Top Secret! In it, Kilmer’s Rivers, a musician and Elvis sound alike, is booked at a music festival in Germany. Hilarity ensues as Nick gets involved with the French Resistance. A cow is also featured prominently in the denouement (which is one of the few works I remember from High School French). “Top Secret!” is an 80’s gem.

Unfortunately for Val, the IRS didn’t keep his tax problems a secret. In fact, the Service brought its own heat, in the form of two $500,000 tax liens, in 2009 and 2010. Batman with tax liens! I’m so disillusioned. Maybe that’s why Val made colossal stink-bombs like Hardwired and MacGruber in 2009 and 2010 to pay for his tax debt before the IRS tacked on too much interest. For those that can’t pay their tax debt in a lump sum full payment, interest can add a hefty burden to an already steep back tax bill. Then again, he did play a blind man in At First Sight. Maybe art imitated life and he didn’t notice the huge pile of lien notices in the mailbox.

The IRS compounds its interest daily on back tax liabilities and continues to charge interest until your debt is paid in full. The IRS rate of interest is determined on a quarterly basis. Generally, interest is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest is compounded daily.

For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3%. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5%.

As Nick Rivers’ Top Secret! love interest Hillary Flammond exclaimed: “Things change, people change, hairstyles change, interest rates fluctuate.” Well that’s true most of the time, just not for the next few months. On August 23, 2012 the IRS announced that interest rates will remain the same for the fourth quarter of 2012.

The rates are:
• 3% for overpayments (2% in the case of a corporation),
• 3% for underpayments,
• 5% for large corporation underpayments,
• 0.5% for the portion of a corporate overpayment exceeding $10,000.

You may be talking to a tax resolution company that tells you they will make the IRS abate the interest charged to you. If you hear this, run. In most cases, IRS interest is not negotiable, and it will continue to accrue until your balance due is paid in full. The Service even charges interest on the penalties assessed to you for non-payment. IRS Notice 746 states “We charge interest on penalties for filing late, paying late, over or understating valuations, and substantially understating the tax you owe.”

The Offer in Compromise is one way to possibly get out of paying IRS interest on a back tax debt. However, very few delinquent taxpayers qualify for the OIC. We’ll talk more about the OIC soon enough. M&M Financial specializes in resolving business and personal tax liabilities. We have perfected a unique tax resolution system that allows us to work within the strict guidelines set by the IRS and State taxing authorities, ensuring the best possible results for our clients. Complete our contact form at mmfinancial.org, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.

Play The Trump Card and Win! Tax Debt and Bankruptcy

Ivana Trump once bragged to Bette Midler in a movie about greed and revenge,”Don’t get mad.  Get everything!” Maybe her calculated evisceration of ex-husband Donald’s bank accounts (and key Manhattan real estate jewels like The Plaza Hotel) after their legendary 1992 divorce backed him into a financial corner. This self-made-through-daddy’s-money King of Conceit has filed corporate bankruptcy four times in his career thus far! And not unlike Cher’s endless farewell tour (going strong since 1998), Don survives against the odds to come back stronger than ever. I wish I could say the same for his hair. Although “The Donald” (a name mockingly bestowed upon Trump by Ivana to describe his bloated ego) has never been convicted of tax evasion, he has managed to pay minimal amounts of income tax relative to his income. For most regular people that file bankruptcy, a fresh start at zero awaits when the process concludes.

As The Donald has demonstrated, bankruptcy is a useful tool. And if you owe taxes, it may benefit you greatly. M&M does not specialize in bankruptcy and we are not bankruptcy attorneys. If you are considering bankruptcy, contact a licensed bankruptcy attorney to determine your options. We recommend getting three opinions from three separate bankruptcy attorneys before moving forward. If you are thinking about filing bankruptcy because you owe taxes, contact M&M Financial to find out what options you have to resolve your tax debts directly with the IRS and State taxing authorities.

In general, personal income tax must meet five rules to be considered dischargeable in Chapter 7 and Chapter 13 bankruptcy.

1. The due date for filing a tax return is at least three years ago.
2. The tax return was filed at least two years ago.
3. The tax assessment is at least 240 days old.
4. The tax return was not fraudulent.
5. The taxpayer is not guilty of tax evasion.

Tax debts that arise from an IRS Substitute for Return (SFR) are not dischargeable. Internal Revenue Code 6020(b) allows the IRS to prepare returns and secure tax liability assessments from non-filing taxpayers who have an open filing requirement and do not file a return as required. This process is called a Substitute for Return (SFR). These tax liabilities cannot be discharged unless the taxpayer files a tax return for the year in question.

Payroll tax liabilities are not dischargeable in bankruptcy and neither is the Trust Fund Recovery Penalty assessed to the Responsible Individuals of a delinquent business that owes payroll tax. Remember, the IRS may attempt to assess the payroll tax liability to the business and the Responsible Individual(s) in an effort to collect the same tax from as many sources as possible. A Responsible Individual may be a shareholder, officer, check signer, employee, or any individual responsible for paying the payroll tax on behalf of the business.

If you owe back taxes and are currently in a bankruptcy proceeding, you are not eligible to request a resolution to the tax liabilities from the involved taxing authorities. Any resolution of the outstanding tax debts, generally must take place within the context of the bankruptcy proceeding. If you are thinking about filing bankruptcy because you owe taxes, contact M&M Financial to find out what options you have to resolve your tax debts directly with the IRS and State taxing authorities. Complete our contact form at http://mmfinancial.org/contact.html, or call us at 866-487-5624 to find out how M&M’s Tax Resolution System can help you.