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Danbury Tax Law Blog

Is the IRS willing to negotiate when it comes to back taxes?

When it comes to collecting taxes, the Internal Revenue Services just wants to get paid. This department is somewhat understanding that people may struggle to pay their taxes, but they will not let people get by without paying them forever. Connecticut residents who owe back taxes can help themselves and their situations by trying to work out a deal with the IRS.

Most people do not think that Uncle Sam would be open to negotiations when it comes to taxes. This is not necessarily true. While the government wants full payment as soon as possible, for those who are open and upfront about their struggles to pay taxes, the IRS may be understanding and even helpful.

Paul Manafort's tax evasion trial moving forward

Connecticut residents who pay attention to the news have probably read an awful lot about Paul Manafort. He was the campaign chairman for President Donald Trump who is accused of bank fraud and tax evasion. Both are serious crimes with significant consequences if prosecuting attorneys achieve a conviction.

The claims against Manafort came after a probe into whether Trump's campaign had any ties with Russia. Other individuals accused of collusion settled their cases privately. Manafort is the first person to take his case to trial. President Trump has dismissed the claims, calling this whole thing a witch hunt.

The IRS may seize your home or business, but should it?

The two things that just about everyone in the United States fears are death and taxes, and many people spend years attempting to avoid them, bargain with them and make deals for a little bit more time. When it comes to owing federal taxes, most people end up making deals for more time to pay.

However, the IRS may have other ideas. In fact, as the agency attempts to collect the back taxes you owe, it may attempt to seize your business and/or your home. The IRS has a great deal of power and reach when it comes to its collection efforts, but that does not mean that it is always in the right.

A few facts about estate taxes

Losing a loved one is not an easy thing to go through. When a loved one passes away, it is normal to have questions while handling his or her final affairs. One thing that those who are left to close out estates in the state of Connecticut need to make sure that they consider is estate taxes. If they don't, there can be significant consequences.

The state and federal government have the right to assess estate taxes. The taxable estate has to reach a certain value before taxes kick in. The state amount and federal amount are different and are frequently changed. A tax attorney can provide information on the current estate tax limits.

Connecticut income tax: Tax exempt does not mean no tax filing

There a number of organizations in Connecticut and elsewhere that are considered tax-exempt. This means they do not have to meet the same tax standards as everyone else. While they may not have to pay income tax, this does not mean that they do not have to submit a tax filing every year. They do and failing to declare and disclose tax information can have significant consequences.

According to the Internal Revenue Service, all organizations that are considered tax-exempt have to file their tax returns in May instead of April. The forms they have to file are called 990 forms. There are several different kinds depending on the organization's needs, gross receipts and organization type.

Tax liens are not the only way the IRS gets its money

For many, federal taxes are a year-round issue, especially if they are behind on paying what they owe. The pressure of owing back taxes to the federal government can affect many areas of a person's life. Unlike most other creditors, the IRS has powers it can use to recover the debt, such as garnishing wages and placing tax liens on property. The agency is now putting into action its new powers granted by a recently-enacted law.

Residents in Connecticut and across the country who have unpaid taxes may have reason to fear for the validation of their passports. For those who are seriously delinquent on more than $51,000 in taxes, the IRS has authorized the State Department to deny new passports, revoke existing ones or refuse to renew expired passports. This will likely affect over 360,000 Americans.

The sales tax deduction -- who can take it?

Connecticut residents who make a lot of big purchases throughout the year may wonder if they can use that to their advantage come tax time. The answer is, maybe. It may be possible to deduct sales tax and reduce the amount of taxes one owes. How does that work?

Every tax season, one has to choose if he or she will itemize or take the standard deduction. If itemizing, one can then choose between deducting local and state income taxes or sales tax. It is not possible to take both deductions.

New income tax forms were supposed to be simplified

In 2017, Congress promised a simplified tax-filing process. Instead of multiple pages to fill out, the average person -- whether he or she lives in Connecticut or elsewhere -- would have one small form to complete and send to the Internal Revenue Service. Well, the new income tax forms do not appear to be any easier than the previous ones.

The 1040 form has been changed quite a bit. It is still the main document one must complete and file. Some of what was removed from the form was placed on documents called schedules. This means more paperwork for some individuals, not less, and it is certainly not simplified.

Protecting your rights when you owe the IRS

Tax debt is unlike any other. Owing money to the federal government can be an overwhelming burden that follows you wherever you go. It may keep you awake at night, damage your relationships and interfere with your enjoyment of life.

Falling behind on your taxes is different from other forms of debt because the IRS has privileges for collecting debt that other entities, like your credit card company or mortgage holder, do not have. For example, most collectors must obtain a court order to garnish your wages or levy your bank account, but the IRS only has to send you a letter. If you are dealing with unpaid tax debt, there are some things you should know to avoid complicating your situation.

Income tax and the offer in compromise

Connecticut residents who owe a substantial amount in taxes for either the current tax year or as a result of owning back taxes may feel overwhelmed at the thought of trying pay the IRS. If one lacks the funds to pay everything off all at once, it is easy to feel somewhat trapped and defeated. Thankfully, there are options out there to help individuals in just this kind of income tax situation. One great example is an offer in compromise.

An offer in compromise, if it is something for which one qualifies, allows a person to settle his or her tax debt for a lesser amount than what is actually owed. This is not something that is available to everyone. It is only an option for those who can show that paying their full tax debt would create a financial hardship or for those who truly lack the means to meet their tax liability.

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