IRS Adjusts Rules on Innocent Spouse Requests

Tax Act

Innocent Spouse Relief has always been available as a way for taxpayers who file joint tax returns and who were not aware, nor had any kind of reason to be aware, that her or his spouse had underpaid or understated their liability for income taxes. It was designed to offer the innocent taxpayer some protection from the faults of their partners and spouses and details of how it works were to be found in Publication 971 which was entitled Innocent Spouse Relief.

The regulations detailed in Publication 971 state that innocent spouse requests that are seeking relief from liability need to be filed within 2 years from the time that the IRS begins action for collection against the spouse. The point of this time limit was always that it was established to encourage early and swift resolution while there was still evidence remaining. However it has been announced that the IRS now intends to issue new regulations stating that they will be removing this two year time limit. In doing so they have stated that the reason for its removal is that they wish to extend the period in order to assist more innocent spouses in their relief requests.

From now on the IRS will not be applying that 2 year limit to any equitable relief cases and any taxpayers who have previously been denied relief requests purely on the basis of the two year limit are now eligible to reapply if they wish to. To do so they need to fill out IRS form 8857. In addition, those taxpayers who have ongoing cases currently held in suspension are now going to be afforded the benefits of the new rules and need not restart their application. Similarly they will not be applying the two year restriction to any cases that are pending litigation that involve equitable relief and if litigation has become final, they will suspend collection under many circumstances.

All changes are effective immediately and can be found in Notice 2011-70.

Alex is a freelance journalist and financial blogger. He loves to write about football and jazz but spends most of his days writing about mortgages, credit cards and tax reduction.

IRS Becomes More Lenient in Light of Recession

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The IRS typically resorts to a lien system when it has difficulty collecting taxes from individuals for a long period of time. These liens can make it hard for a person to qualify for insurance, housing, or even find a job. In effect, a lien gives the IRS access to a person’s property if the person owes enough in back taxes. This process can destroy a person’s credit rating. Since the country is working to recover from a recession, it is important that individuals have access to these opportunities to create more income. The IRS has agreed to change its lien methods so that there will be less pressure on the already strained economy.

Reducing Number of Liens

The first step in reducing the number of liens that the IRS is using is to change the amount of taxes owed that causes a lien to be placed. Until this year, a lien was put in place if an individual owed $5,000 or more in back taxes. This year, a person must owe at least $10,000 before the IRS will put a lien in place. That change alone will allow thousands of individuals to continue to make payments on their taxes without the additional pressure that a lien can cause. It will also help keep the economy moving forward because more people will be able to find work and purchase large ticket items.

Easier Lien Withdrawal

The IRS is also willing to be more flexible with individuals who are already paying on liens that were imposed previously. It is easier for someone to establish a payment plan so that they can have their lien withdrawn by the IRS. Having a lien withdrawn will immediately begin to repair the person’s credit rating so that he or she can take the necessary steps to begin paying off the tax obligation without suffering from the severe penalties a lien creates.

Delayed Payment Options

There are some ways that individuals can avoid a lien altogether. The IRS is becoming more vocal about payment options that could keep people out of serious trouble. The first step is to file your tax return on time, even if you cannot afford to make your tax payment right away. Once your return is filed, you can begin negotiating with the IRS for different payment options. The IRS will allow most tax payers to delay their payments by 30 or even 60 days in most cases.

Installment Payments

If a short delay in payments is not enough to help you pay the amount that you owe, you can establish an installment plan with the IRS. You will need to talk with an IRS agent about your options for the plan, and you will have to pay additional fees if you must create an installment plan. Keeping an open line of communication with the IRS and cooperating as much as possible will reduce your odds of being actively pursued for the taxes that you owe. The IRS has created many ways for individuals to pay their taxes so that they do not have to resort to liens.

 

Jessica Bosari writes about personal finance for Billeater.com, a site that offers money-saving tips, advice and information. Visit Billeater for more ways to save.

Finding A Quality CPA In Ohio

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Looking For an Ohio CPA?

When looking for a CPA in Ohio there are many things that you will want to consider before making your final decision.

The first thing to consider in your CPA is word of mouth advertising. If there is a CPA that someone you know is currently recommending you will want to discuss what type of work that they had done and how satisfied they were with the work that the CPA did for them.  That way, you can be confident that will do a good job for you too.

Also, you should check the Ohio AICPA to be sure they have current registration and really are a CPA.

If you have no friends, co-workers or family that has used a CPA in the past you may turn to the telephone book to see what one of the ads looks like for one there.

Once you have found a couple ads that look appealing in the phone book you will want to make a call to the CPA office and have a chat with them over the phone. Some questions that you may want to ask include the following:

1. What they offer?
2. How busy are they, is it going to take a long time to get an appointment there?
3. How much they will be charging you for their service?
4. What kind of tax returns do they do?
5. How long have they been in business?
Overall the process shouldn’t take long to find a qualified CPA that will assist you with your Federal and State tax returns. There are many quality CPA’s in Ohio that will be able to do your return. From Cleveland to Cincinnati, if you do proper research you should not have to pay an arm and a leg for a good accountant that will do a great job.

Common Tax Deductions That Are Overlooked For Small Businesses

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Having a successful tax season involves proper planning throughout the year to maximize on the deductions that relate directly to your business and its income level.

Starting up Expenses

Capital expenses are one of the expenses that are constantly overlooked when looking for ways to reduce your tax expenses. They usually include marketing, overheads and other related expenses needed to start off your business. You can only deduct them for the first five years after your business opens and cash starts flowing into the business.

Education and training expenses

These are some of the other expenses that most businesses tend to overlook as deductions. Any training and education carried out to improve the skills of your workers and the business in general can be used to reduce the tax liability. However the training and education needs to be related to the business and this rule has to be strictly followed for the expenses to qualify as deductions.

Fees for Professional Services

Some of the professional services sought by the business such as accounting and architect fees qualify as deductible expenses. The only rule that one has to consider is that the services need to relate to the current year. If they relate to the future, the expenses then need to be distributed over the years.

Bad Debts Expense

Debts that you never recover from your customers qualify as deductible expenses. However this only applies to businesses that sell goods and not those that provide services.

Other Expenses that Qualify

Businesses differ and hence there may be other expenses that may qualify as deductibles in your business. IRC and 162 can help you identify some of the unique expenses to your business. In case you find them too confusing, refer the matter to your tax accountant with some of the codes that you think fit in with your business. He or she will be in a position to guide you to identify the respective expenses.

This is one thing that you should be very sure about in your small business. Your tax accountant can help you ensure that you take advantage of the tax deductible expenses.