When people face an audit or disagree with an IRS auditor’s determination of one’s tax liability, the situation can be stressful, but there are multiple options to appeal such a decision.  This means that taxpayers who dispute their tax liability can challenge a Notice of Deficiency if they are not able to negotiate an agreement based on an audit.  It is a mistake to assume that a rank-and file IRS auditor’s evaluation that you owe a tax deficiency is accurate because tax appeal officials have more extensive knowledge of complex tax issues.  New Orleans Tax Appeals Attorney Paul A. Grego can advise you regarding your options and aggressively pursue the appropriate option.

There are two options for appealing a determination that you have a tax deficiency which include a Direct Appeal and a Tax Court Petition.  If you wish to appeal a notice of deficiency, it is important to seek legal advice promptly because strict time limits apply.  A direct appeal must be initiated within thirty days while taxpayers have ninety days to pursue a tax court petition after receiving the notice of deficiency which will indicate not only additional taxes assessed but also specify applicable penalties and interest.

While Mr. Grego can explain both options, a tax court petition often will be the more effective approach.  A direct appeal not only involves a shorter timeline to respond but also requires more detailed and extensive disclosure of information than a pleading you file in tax court.  Further, tax court appeals require IRS officials to move more rapidly to resolve cases because the appeals are placed on the judge’s calendar in U.S. Tax Court.  The IRS is overwhelmed with an enormous caseload so IRS lawyers face pressure to resolve the matter because the tax court judge will have an interest in moving the case forward.  This creates time pressure that may motivate the IRS lawyer to agree to a reasonable settlement more promptly.

The other benefit of retaining a tax attorney and filing a tax court appeal is that it communicates the message to the IRS that you are prepared to pursue litigation over the assessed deficiency.  The fact that you are both willing and prepared to pursue a potential trial regarding the claimed tax liability also creates an incentive for the IRS to settle the matter.

If you have received a Notice of Deficiency from the IRS, you should contact experienced Louisiana tax attorney Paul A. Grego.  We offer a free initial consultation so that we can answer your questions and provide an initial assessment of your situation.  Call us today at 504-302-4949 or email us.

After announcing its “fresh start” program in 2011, the IRS expanded that program in 2012, in an effort to help struggling taxpayers start over with a clean slate as far as their taxes are concerned. The fresh start program helped taxpayers who were burdened with tax liens and outstanding tax bills take care of those issues, which in turn increased their credit scores and helped them purchase homes or vehicles.

The original program in 2011 included: increasing the dollar threshold of lien implementation, making it simpler for taxpayers to obtain a lien withdrawal once a tax bill was paid, withdrawing a lien once the taxpayer entered into an installment agreement, creating easier access to installment agreements for small businesses and expanding Offer in Compromise programs so that more taxpayers could be helped. In 2012, the IRS added such relief as:

• Penalty relief for unemployed taxpayers. Since penalties are one of the biggest factors a financially distressed taxpayer may face on their tax bill, penalty relief was offered to self-employed individuals who experienced a 25% or larger reduction in business income due to the economy, and taxpayers who were unemployed for at least 30 consecutive days, in 2011 through April 2012. Taxpayers who have an adjusted gross income greater than $200,000 (if married filing jointly), and $100,000 (if single), do not presently qualify for the tax penalty relief.
• More taxpayers will have the ability to take advantage of IRS installment agreements, in order to catch up on back taxes, as well as more time to pay. The threshold for taking part in an installment agreement has been raised from $25,000 to $50,000, and requires much less financial information. The five-year maximum term has also been raised to six years.
• A more streamlined Offer in Compromise program allows taxpayers with incomes up to $100,000 to participate. Such compromise offers will generally not be accepted if the IRS has reason to believe the tax liability can be paid in full, either as a lump sum or through a payment agreement.

There are many things taxpayers can do to make dealing with the IRS—and paying their back taxes in a timely manner—simpler. Taxpayers who receive a bill for past due taxes may be better off borrowing the money and paying the taxes in full, if an offer in compromise is not possible. This is because of the interest and penalties which will continue to accrue so long as the taxes are outstanding.

Depending on your particular circumstances, you may be eligible for additional time to pay your tax debt in full by filling out a payment agreement application at www.irs.gov. It could also be wise to pay your debt with a credit card, depending on the interest rate of your card. If you are unable to pay your tax liability in full, then you may be eligible for a payment plan in which you make regular, monthly payments. To take advantage of this installment plan you must file all returns and be current with your estimated tax payments.

Even if you owe more than $25,000, you may still qualify for an installment agreement, however you will be required to complete Form 433F, Collection Information Statement, before the IRS will consider such an agreement. While the IRS may not point this out, you will also pay a one-time user fee once your installment agreement is approved, in the amount of $105. Taxpayers with lower incomes may qualify to have that amount dropped to $43.

For taxpayers with outstanding tax debt, it could be helpful to speak with a knowledgeable Louisiana tax attorney such as Paul A. Grego. There are many issues surrounding tax debt, and it can be overwhelming to try and sort it all out. The Law Office of Paul A. Grego has the experience and the knowledge necessary to help you resolve your tax issues. Call 504-302-4949 today or visit our website for additional information.

The Louisiana Department of Revenue has established a tax amnesty program which began on September 23, 2013 and will run through November 22, 2013. The goal of the program is to collect outstanding state tax liabilities from Louisiana residents who have fallen behind on their state taxes and want a fresh start. Eligible taxpayers who apply during the stated tax amnesty period may be eligible to have half of the interest and all penalties waived for the tax periods for which the amnesty is applied. According to state officials, some 450,000 taxpayers and businesses currently owe the state of Louisiana an estimated $2.5 billion dollars although at least half of that amount is currently in dispute.

Louisiana taxpayers who are behind on their tax payments—for any reason at all—will still be required to pay 100% of the their taxes, however 50% of the accrued interest and 100% of the penalties will be waived, creating significant benefits for many Louisiana taxpayers to return to compliance. Delinquent taxpayers and non-filers will also be exempt from all tax penalties. The anticipated revenues from the tax amnesty program are expected to plug a nearly $200 million dollar hole in the state’s health and hospital budget. Using the tax amnesty money to make up the shortfall in the health and hospital budget was determined to be an alternative to raising taxes.

Robert Billiot, Louisiana State Representative, believes the amnesty program can help many taxpayers who were hurt by the BP oil spill or storm Isaac. The amnesty tax program is not new to Louisiana—the state implemented similar programs in 2001 and 2009, collecting $193 million and $483 million respectively. Still, some Louisiana lawmakers oppose the tax amnesty program, claiming it makes it too easy for taxpayers to take advantage of the reduction in penalties and interest. The theory is that taxpayers will simply wait until an amnesty program is implemented rather than being responsible and paying their taxes in a timely manner.

Quite often, states which implement a tax amnesty program will follow the program with increased penalties and stricter enforcement against taxpayers who were eligible but declined to participate in the program. Late penalty fees could increase from 10-25% for those taxpayers who were eligible but did not choose to participate in the program. It is important for Louisiana taxpayers who are considering taking part in the current tax amnesty program to understand that the amnesty program applies to specified taxes and tax periods open under the statute of limitations. Taxpayers who have not filed their taxes are under a statute which has not run which means a potentially unlimited “lookback” period.

The Louisiana tax amnesty program comes with potential problems for the state and local government. Aside from the cost associated with administering the tax amnesty program, should a significant number of delinquent taxpayers fail to come forward or be identified, the program could cost the state rather than providing much-needed revenue. Further, regular use of tax amnesty programs tends to encourage a failure to pay taxes and a “wait-and-see” attitude on the part of taxpayers. The Louisiana tax amnesty program will be repeated in 2014 and 2015, although these programs will last only one month instead of two and may be less generous in terms of penalties and interest.

If you are a Louisiana resident who is unsure whether you should take advantage of the current tax amnesty program, the Law Office of Paul A. Grego can help. For tax amnesty questions as well as any other issues related to federal or state taxes, audits or challenging an IRS decision, Louisiana tax attorney Paul A. Grego will help you determine the best solution. With a free initial consultation and assessment of your particular situation you are well on your way to resolving your tax problems. Call 504-302-4949 today or visit our website for additional information.

Following the Supreme Court decision striking down part of the Defense of Marriage Act, many same-sex partners were left in limbo regarding many areas, including IRS tax rules. On the 29^th of August, the IRS took steps to clear up some of that confusion by allowing all legally married gay couples to file joint federal tax returns—even if they do not reside in a state which recognizes the legality of same-sex marriages. The latest IRS ruling allows same-sex couples the ability to move to and from any state they choose with the knowledge that their federal filing status will remain unchanged. Same-sex couples will now be afforded the same tax benefits as heterosexual married couples including estate tax exemptions, the standard marriage deduction, IRA contributions, earned income tax credits, dependent exemptions and the designation of the taxpayer’s filing status.

Benefits from Filing as Married?

Same-sex married couples will file either as “married filing jointly,” or “married filing separately,” just as heterosexual couples have always done. Since the statute of limitations for filing a refund claim is either three years from the date the return was filed or two years from the date taxes were paid, the government will also allow refund claims for same-sex married couples to be filed for the tax years 2010-2012. Those same-sex couples who believe their tax bill will automatically be lowered thanks to the new ruling could find themselves disappointed. All married couples run the risk of landing in a higher tax bracket, subsequently falling under recently increased taxes on taxpayers with higher incomes—particularly if both spouses are contributing substantial levels of income to the marriage.

As an example, a couple who makes $200,000 per year—with each partner contributing roughly the same amount of income—would pay a “marriage penalty of almost $900. On the flip side, if one spouse earned $180,000 of that $200,000 and the other spouse earned $20,000, filing jointly would save the couple over $8,800.  For this reason, those couples who are considering amending their returns for the past three years—and expecting a windfall by doing so—might want to consult an experienced tax professional who can help determine whether it is beneficial to file amended returns or not.

The Time is Short to File 2012 Tax Returns

There is a very short window of opportunity following the new IRS ruling for same-sex couples who were legally married by last December 31^st but who have not yet filed their 2012 tax return to file individually if they suspect they will be subject to marriage penalties.

Same-sex couples will also be eligible for estate and gift tax exemptions as well as combining IRAs and deducting taxes paid for employer health insurance.

There may remain complications for same-sex couples who live in any of the 37 states which have yet to recognize their marriage. These couples may be able to file their federal tax returns as married, but could still be required to file state returns as individuals even though most state income tax laws begin with federal taxable income. The IRS expects the new ruling to provide a small increase in federal revenues due to the likelihood of the marriage penalty coming into play for a significant number of same-sex couples.

When You Have IRS Questions, We Can Help

Taxes can be a complex subject, and those same-sex couples who will now be filing joint returns as a result of the recent IRS ruling may need tax guidance to ensure they make the best decisions. It remains to be seen whether states will fall into line with the federal ruling; if they do not, the tax complexities are bound to increase. Paul A. Grego is a highly experienced Louisiana tax attorney who has the knowledge and background necessary to ensure you get the best answers regarding IRS issues. Whether you are dealing with filing a federal return as a same-sex couple or have other tax issues, Paul A. Grego can help. Mr. Grego has helped thousands of clients with a variety of tax issues and wants to help you by offering a free consultation and answer any questions you may have. Call 504-302-4949 today to speak with an experienced Louisiana tax attorney.