Posts Tagged: ‘Tax Debt’

Tax Debt will Affect Passport Renewals and Applications for Thousands of Americans

August 3, 2018 Posted by kingcade

Americans who have overdue tax debts will soon find it difficult to receive a new or renewed passport, according to the Internal Revenue Service (IRS). It is estimated that approximately 362,000 Americans have overdue tax debts, and soon, Congress will be increasing efforts to enforce a law passed back in 2015.

The 2015 law requires that the IRS and State Department deny applications for new or renewed passports for taxpayers who have overdue tax debt in the amount of $51,000 or more.

Increased efforts to enforce this law began in February 2018, according to a recent Wall Street Journal report. Currently, the IRS is in the process of sending the names of these 362,000 individuals to the State Department.

According to the IRS Division Commissioner, Mary Beth Murphy, authorities are currently only denying passports rather than revoking them for people who hold excessive IRS debts. In fact, the State Department has stated that the agency has already denied passports for individuals who hold tax debts. For the time being, Americans with over $51,000 in tax debt will be able to continue traveling abroad if they hold current passports.

The IRS has accounted for inflation and other assessed penalties, taxes and interest when calculating the amounts owed.  These amounts do not include debts that were collected by the IRS, such as FBAR penalties due to the person’s failure to report foreign financial accounts or child support owed. If the taxpayer has entered into an agreement for installment payments, is in the middle of a bankruptcy proceeding, is a victim of identity theft or is in a federally declared disaster area is not subject to revocation of their passports.

The State Department is within its rights to issue a passport for emergencies or other humanitarian reasons should a U.S. citizen who is subject to this law need to return to the U.S. from overseas.  Individuals affected by the law will be notified in writing by the IRS.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

 

Private Debt Collectors a ‘Most Serious Problem’ at the IRS – Here’s what you need to Know

June 25, 2018 Posted by kingcade

The IRS reactivated a program previously instituted where private debt collectors are used to collect upon unpaid taxes owed by individuals with delinquent tax debts. This IRS Private Debt Collection (PDC) program, however, has been identified as a serious problem, according to the National Taxpayer Advocate.

According to a recent report, taxpayers who had debts assigned recently from the IRS to these private debt collection agencies ended up entering into repayment agreements they simply could not afford. Approximately 43 percent of them were earning income well below their allowable living expenses.

The PDC program also ends up costing the U.S. Treasury Department more than it is worth. In fact, experts criticize these programs as the private collection companies are allowed to keep 25 percent of what they end up collecting, which means the programs cost the Treasury more than the money that comes in after all is said and done.

This brings the question to many taxpayers of how they know whether they are likely to be contacted by a PDC. The taxpayers who are normally chosen are those who have IRS debts that are considered by the IRS as an inactive tax receivable. A tax debt is declared “inactive” after the IRS removes it from the active case list due to either lack of resources or the inability to find the individual. If more than a year has passed since the taxpayer had any communication with the IRS for the collection of the over-due tax, the debt will be considered “inactive,” as well.

When a PDC contacts a debtor, they will normally request full payment of the debt from the taxpayer first. If the taxpayer is not able to make full payment immediately, the private collection agency will then offer the person an installment agreement. However, many times, the installment agreements that are offered and later accepted by the taxpayer end up being more than that person can handle.

What Agencies Have IRS Authorization?

Currently, four PDC agencies have been selected by the IRS to operate the private debt collection program. Only these four firms should be contacting taxpayers, and they include:

  • CBE Group in Cedar Falls, Iowa;
  • Conserve in Fairport, New York;
  • Performant in Livermore, California; and
  • Pioneer in Horseheads, New York.

Phone Scams

Phone scams have been on the rise after individuals have reported being contacted via phone by a person who claims to be affiliated with the IRS and receiving demands for immediate payment. The IRS will not call taxpayers to collect on a debt. Rather, any demand for payment from the IRS will be by a letter on official IRS letterhead, called a Notice CP40. The letter will tell the taxpayer that the tax debt has been assigned to a PDC. The PDC will then confirm in a separate letter that the tax case has been assigned to them. In both of these letters, the taxpayer should see a 10-digit identifier number in place of the taxpayer’s Social Security number. The purpose of this number is to allow for two-party authentication between the taxpayer and the PDC.

Other Red Flags 

The IRS has also provided other red flags taxpayers should be aware of when receiving any questionable communication from someone claiming to be from the IRS. These red flags include the following: 

  • PDCs will not ask the taxpayer to pay them for any fees or owed taxes, and they will not accept payments from the taxpayer. Rather, these companies will inform the taxpayer that any payments for these tax debts should be paid by check directly to the IRS or paid online through the IRS website.
  • If a payment is made by check, it should be written payable to the “United States Treasury.” The IRS nor the PDC will take payment in the form of a gift card, prepaid debit card or iTunes gift cards. Scammers have been known to regularly request payment in these forms.
  • If a taxpayer is contacted by a tax collector, the taxpayer should call the IRS to confirm first that the debt has been assigned to a PDC before working with that company.
  • The PDC cannot enforce collection actions against the taxpayer, including issuing a levy or filing a notice of federal tax lien. Instead, they must follow all IRS rules per the Fair Debt Collection Practices Act (FDCPA).

Tax Debts That Cannot Be Assigned

Lastly, the IRS cannot legally assign a tax debt to a PDC in cases where the taxpayer is deceased; the person is under the age of 18-years-old, or to a person in the military who is in a designated combat zone. If someone is the victim of tax-related identity theft, is classified as an innocent spouse and is currently involved in an exam, installment agreement or offer in compromise, he or she is exempt.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Scientologist with “Super Power” Can’t Discharge Tax Debt, says Bankruptcy Judge

November 3, 2017 Posted by kingcade

Super powers could not save well-known Scientologist, Matt Feshbach and his wife Kathy from $3.8 million dollars in tax debt owed.  Florida federal bankruptcy Judge Catherine Peek McEwen had this to say in her ruling:

“The Feshbachs made poor spending decisions, continually leading a life of excess in the face of serious, known financial obstacles. At all times, their primary concern should have been reducing their substantial tax debt. But as their immoderate spending choices show, they were far more focused on living in the lap of luxury. They would have been wise to heed the proverb which cautions that enough is better than too much. As it is, however, the Feshbachs misjudgment ultimately cost them complete relief. Having concluded that the Feshbachs willfully attempted to evade their tax debt within the meaning of 11 U.S.C. § 523(a)(1)(C), the Court rules that such debt is nondischargeable. Accordingly, the Court will enter a separate final judgment in favor of the United States in this proceeding.”

The couple, who is considered Scientology royalty, had accumulated $13 million in revenue since getting into trouble with their taxes, but refused to make good on their $3.8 million tax debt.  As legal documents prove, the couple did not attempt to slow down their spending as the case was going through court:

“$722,000 was spent on personal travel (including $233,000 for a rental home in Aspen), a half-million on clothing, another $370,000 on groceries, (plus another $78,000 eating out) and $147,000 plus on entertainment…$360,000 on their children, including a private education for their son. But more important than their children was the private chef, who cost more than $610,000 over eight years.”

What is most shocking is that during the same time the Feshbach’s knew they were being investigated by government agencies and as they were trying to low-ball and delay payment to the IRS, they continued spending at an excessive rate, assuming the court would discharge their IRS debt anyway.

A couple of examples that were found in IRS documents that were part of the bankruptcy court file include:  In 2011, IRS investigators found the couple’s claim to being “penniless” was “hardly credible” when they discovered that the couple was spending thousands of dollars a month to send their 14-year-old son to Scientology’s pricey “Delphi Academy” private school in Oregon.  One of the largest credit card charges they found in that period was nearly $10,000 for “Scientology publications.”

Matt Feshbach was the first Scientologist in the world to go through “Super Power” processing because in the 1990s he had made a $1 million donation to the Super Power project, which eventually resulted in the “Flag Building” being opened in November 2013.

Click here to read more on this story.

If you are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com

Student Loan Debt Forgiven, but Tax Bill Remains

October 24, 2017 Posted by kingcade

Wounded war veteran Will Milzarski’s student loan debt was forgiven, but the IRS wants him to pay $62,000 in income taxes on the loan cancellation.  The retired 1st Lt. is a lawyer specializing in disability rights and took a leave from his state job to return to the Army to attend Officer Candidate School.

His two tours of duty in Afghanistan left him with a traumatic brain injury, post traumatic stress disorder and hearing loss. The Department of Veterans Affairs considers him totally and permanently disabled, which lead to a cancellation of $223,000 in student loan debt.

But what he didn’t expect was the IRS notice that followed.  Milzarski is facing $8,000 in Michigan taxes, penalties and interest in addition to federal taxes- that’s $70,000 in total. Milzarski’s high student debt is largely attributed to his law degree, which he earned in 2002 from Cooley Law School.

He was able to subtract his other debts to bring down the amount of income attributed to the loan forgiveness to $161,000. But that pushed him into the top tax brackets.

While there are some exceptions, canceled debt is often considered income.  Milzarski said he is facing garnishment of his disability pay and a lien against his home.  Milzarski led soldiers on 244 combat missions and 43 engagements with the enemy. Among his 18 awards are Purple Heart and Meritorious Service medals.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

How do you know if it’s the IRS Contacting You?

August 11, 2017 Posted by kingcade

When the IRS contacts you, their first form of communication is through the U.S. Postal Service.  The IRS will NEVER initiate contact though email, social media or text messages.

Here are some additional ways the IRS will contact tax payers. It is important to be aware of these so you do not fall victim to an IRS-related scam.

  • An IRS agent or tax compliance officer may call you after mailing a notice to confirm an appointment or discuss an item for a scheduled audit;
  • Private debt collectors can call taxpayers for the collection of certain outstanding inactive tax liabilities- but only after the taxpayer and their representative has received written notice;
  • Private debt collectors for the IRS must respect taxpayers’ rights and abide by the consumer protection provisions of the Fair Debt Collection Practices Act (FDCPA).

All payments should be made to the U.S. Treasury.  Taxpayers should never use a prepaid debit card or wire transfer to make a payment.  Specific guidelines to make tax payments can be found at irs.gov/payments.

IRS employees will NEVER:

  • Be hostile or insulting;
  • Demand payment without giving taxpayers the opportunity to question or appeal the amount;
  • Require a specific payment method (i.e. – a prepaid debit card);
  • Threaten lawsuits, arrest or deportation for not paying;
  • Request credit or debit card numbers over the phone.

A special page on IRS.gov, “How to know it’s really the IRS calling or knocking on your door,” helps taxpayers determine if a person claiming to be from the IRS is legitimate or a scammer.

If you have any questions on this topic or are in a financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.

Related Resources:

http://www.examiner-enterprise.com/business/20170806/how-do-you-know-when-irs-is-contacting-you