What is an IRS Federal Tax Lien?

The IRS federal tax lien is a claim registered against property for the non-payment of back tax liabilities. Unlike a bank or wage levy, the tax lien does not deprive the taxpayer of the property or the right to transfer this property. If you owe back taxes then you may ultimately become the victim of one of the most powerful tools in their collection arsenal: IRS tax liens. And know that the larger your back tax debt liability, the sooner the IRS may issue this federal tax lien against your property. The formal notification is called a Notice of Federal Tax Lien and this is a ?public notice? that you owe the IRS money. Now your IRS tax problem will no longer be a ?private or confidential matter?. Anyone considering doing business with you like banks, various financial institutions, customers and vendors will know that you owe the IRS back taxes. That is the reason so many delinquent taxpayers hope to stop IRS tax liens before this matter goes on the public record at the County Clerk?s office in their particular county. Once the IRS federal tax lien is registered, then the IRS has now become a secured creditor right behind other prior secured creditors, but ahead of all your unsecured creditors. And to make matters even worse, this IRS tax lien will go on your credit report. It will negatively impact your credit score, obviously making future financing for home, vehicle or other types of loans very difficult. Very often, this federal tax lien can make you completely ineligible to borrow, even at ridiculously high rates of interest, depending upon the guidelines imposed by the lender.

What are your options to secure an IRS lien release?

The Internal Revenue Service will release a Notice of Federal Tax Lien within 30 days after you satisfy the tax due (including any interest charges or other additions) by paying the tax debt or by having it adjusted, or within 30 days after the IRS accepts a bond that you submit, guaranteeing payment of the debt. It is prudent to seek out the advice of IRS tax specialists for IRS tax liens. The negative impact can be far reaching, as noted above in the first section. Keep in mind that an IRS lien release will typically occur ten years after the tax is assessed, provided the IRS does not file it again. However, contacting IRS tax specialists to review your tax lien problem is certainly advisable over ?waiting out the 10 year period? for the IRS federal tax lien to automatically or self-release. There are standardized procedures in place for IRS lien releases, discharges and subordination. In qualifying situations, the IRS will normally remove the tax lien within 30 days and the taxpayer may receive a copy of the Certificate of Release of Federal Tax Lien.

What can be done if you cannot afford to pay the tax debt in full?

Obviously, if you had the funds to remit on your back tax liability, you would not find yourself in this predicament where you are staring in the face of an IRS federal tax lien. As discussed above, the IRS will issue an IRS lien release if you satisfy the tax debt due by paying it or having it ?adjusted?. This essentially means that the IRS is open to a tax settlement, also called a ?compromise offer?, for an amount less than your full back tax liability. While this may sound quite easy, do not plan on this being a simple situation. If you are hoping to reduce your delinquent tax debt, there are several programs you may qualify for. IRS tax specialists have the in depth knowledge and experience to review your financial situation as it pertains to the Offer in Compromise program (both personal and business) as well as IRS Penalty and Interest Abatement. Both these programs offering IRS tax debt relief do reduce the overall tax liability. However, making or submitting an ?offer? to the IRS will not affect the IRS tax lien which remains effective until your offer is formally accepted and the amount is full paid to the IRS. At that point, a taxpayer may request the IRS lien release. Again, IRS tax specialists handle IRS tax liens a daily basis. They are abreast of all the complexities to insure your best chance at success for an accepted reduced offer and the ultimate release of your IRS federal tax lien.

Right now, Canadian first-time home buyers can take advantage of the First-Time Home Buyers’ Tax Credit (HBTC). If you qualify and your home qualifies, this could be a nice bonus to taking the plunge of buying your first piece of residential real estate.

You qualify for the HBTC if you are a first-time home buyer who buys a home in Canada. For the purposes of this tax credit, “first-time home buyer” refers to anyone (and their spouse or common-law partner) who has not owned and lived in a residence during the year they buy or for any of the four years prior to their purchase. (If you are eligible for the Disability Tax Credit (DTC), you don’t have to be a first-time buyer to purchase)

The tax credit amount is determined by the lowest personal income tax rate of the year times $5000. For instance, 2009’s lowest rate was 15%. Multiplied by the amount of $5000, this equals $750. So, for 2009, the HBTC is $750. Each year, the credit is recalculated, so it may be higher or lower than previous years.

The beauty of this particular credit is the flexibility of the purchase options. In addition to the standard single-family home unit, this tax credit covers a lot of residential real estate. You can get this tax credit on a mobile home or even on a co-op where you own equity interest in a unit (Unfortunately, shares that only give you the right to tenant a unit are not eligible). Condos of all types qualify as well, with apartments, duplexes and whole apartment buildings.

You can only claim the HBTC once per dwelling, so if you and another eligible party jointly purchase a home, you can’t each get $750 in tax credits! However, you are able to share the credit if you so desire, so that each eligible party gets a share.

The 2009 and subsequent personal income tax returns will incorporate a new line that allows you to claim this credit. If someone else is doing your tax return, ensure that their attention is drawn to the fact that you are eligible for this credit. You don’t have to supply any supporting documents, but ensure that you have them easily accessible should the CRA want to take a look at them.

Keep the HBTC in mind when you consider buying a Canadian home. It’s just another great reason to take the final step of real estate home ownership.

With difficulties in the economy emerging every new day, people are having to look for a variety of ways to save what little money they are earning. It seems that everyone is having to cut back in one way or another just to make it through everyday life. Spending money seems to be out of the question. But where does that leave first time homebuyers who are seeking to invest in a principal property to start their lives in? What are they supposed to do in this tight money situation? Well, all they need to do is fill out a tax credit form… 

            Many readers may be aware of the tax credit established for home buyers in 2008, but the government has decided to give out a modified version for the 2009 tax year. In 2008, all the money that a home buyer received was required to eventually be paid back. The 2009 first time home buyers tax credit is no longer a loan, but rather a true credit of up to $8000 that a first time home buyer can receive based on the value of his house. This is a dollar for dollar reduction of an individual’s overall taxes that can significantly impact the results of their tax returns. 

            Of course, there are some stipulations that need to be abided by for a person to qualify for the stimulus plan tax credit. The credit only goes to a first time principal home buyer, with “first time” meaning that the individual has not owned a home in three years prior to the new purchase and “principal” meaning that the purchased home is the individual’s primary residence. When it comes to married couples, both of the individuals need to be categorized as first time home buyers to receive the tax credit. Individuals buying a house together though can use the status of whatever individual may qualify.

             Income is also a determining factor for recipients of the stimulus plan tax credit. An individual filing for the credit must make less than $75,000 and married applicants must make less than $150,000 combined a year. Those individuals who make above these levels in modified adjusted gross income could qualify for part of the stimulus tax credit with their levels of credit decreasing proportionally to the amount of money that their income exceeds. No individual can apply if he or she makes more than $20,000 above the capping amount.

             In spite of the complications of who qualifies, the process of filing for the potential $8000 tax credit is relatively simple. A home buyer needs to fill out an IRS Form 5405 and then claim the amount from the form on the 1040 form they normally fill out. The rest is a matter of income and time. Perspective applicants should note that they have to reside in their new home for three years after they receive the credit or they will be required to pay it back. Most people don’t purchase a home with the thought of moving out that quickly, but it is something to be aware of. Overall, the 2009 first time home buyers tax credit is a great solution for victims of this falling economy, and it may be one of the first steps toward recovery.

Tax?is the price one pays for civilization. Man has to endure with taxes as long as civilization is in existence. And as long as taxes are in existence,? Tax preparers will be in existence (abundance?) who help tax payers compute their incomes & taxes and file the tax return.

Computation of tax involves gathering of sensitive information about a person like:
1. What was the marital status of the person during the year?
2. If the person is a widow, when did the spouse expire?
3. If the person is single, was he ever married? And if yes, when did the divorce come through?
4. How many dependent children does a person have and what is the expenditure on them?
5. What are the incomes of the person from various sources and what are the expenses during the year?

All these information are highly sensitive to any person and when that person wants the help of a tax preparer, the tax preparer has to have a very high degree of integrity and trust worthiness. With such kind of responsibility as regards data confidentiality reposed on the tax prepares, is it not necessary for Law makers to impose some kind of accountability on the tax preparers?
For long, the certified members of AICPA (referred as CPAs) have been in the forefront in helping tax payers with their tax computation and tax return filing. And since the code of ethics of AICPA (Ethics Ruling No 112 under Rule 120: Integrity and Objectivity) makes it mandatory for the members to take express permission of the tax payers before disclosing the confidential data pertaining to the tax payer, tax payers usually have been comfortable with the CPAs. However, off late, many other Tax Preparers have come up to help tax payers in filing their returns and these preparers are not essentially members of AICPA. Thus the code of ethics does not apply to such people. This meant that such tax preparer could use the services of a third party service provider in preparing the tax return, thereby disclosing the confidential data of the tax payer to the third party service provider, without the tax payer getting to know that his/her information has been shared with a person he/she does not even know!
To address this loophole, the IRS has updated Section 7216, rules for tax preparers on 18th Dec’08. These updated rules would be effective from 1st January’09. Per this rule, “any person who is engaged in the business of preparing, or providing services in connection with the preparation of, returns of the tax imposed by chapter 1, or any person who for compensation prepares any such return for any other person, and who knowingly or recklessly -
(1) discloses any information furnished to him for, or in connection with, the preparation of any such return, or
(2) uses any such information for any purpose other than to prepare, or assist in preparing, any such return, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, together with the costs of prosecution.

Thus any tax preparer now has to compulsorily take the express permission of the tax payer before the services of a third party service provider is utilized. It thus marks a new beginning in outsourcing business as well. Tax preparers who look at outsourcing some of their work would now have to take consent of the clients before doing so. This would make outsourcing a transparent and more acceptable service.

The tax preparer would have to be highly catious about partnering with outsourcing firms. An average tax payer would not entrust his information to a person who has no liablity pertaining to data confidentiality. But the moment, tax preparer partners with a CPA or Indian CAs, tax payers would have no problem about the sharing of the information because it is public knowledge that these professionals are governed by strict code of ethics which bars them from disclosing data. Thus, it makes sense for tax preparer looking out for outsourcing partners to opt for such outsourcing firms as are owned and managed by CPAs.

With a sagging economy, businesses located in the United States are utilizing every means possible to improve their bottom lines.? One under-used resource available to California-based corporations are California tax incentives.? You may be able to take advantage of a California tax credit, other tax incentives and even personal tax credits if your business operates in one of California’s Enterprise Zones. ?

The good news is that Enterprise Zones are located throughout the state of California.? These forty-two zones are in economically disadvantaged areas of the state, and by being classified as an Enterprise Zone, they qualify for a number of different corporate tax incentives. ?

One of these corporate tax credits can come in the form of hiring credits.? If you have what the state calls a “qualified” employee, your company in the Enterprise Zone may be eligible for up to $12,500 in California tax credit.??? Anywhere from fifteen percent to fifty percent of your worker base may make your business eligible for this California tax credit.? Employees that qualify include those who are veterans, physically or economically challenged, American Samoans, Pacific Islanders, Native Americans and those who have been recently laid off.? Another part of this California tax credit that many business owners are unaware of is that these corporate tax credits can go back for up to four years prior if amended returns are submitted, giving small and mid-sized business a much-needed financial gain of up to $200,000.

There are other California tax incentives available in the area of sales tax credit offered to businesses in the Enterprise Zones.? Partnerships, LLCs and S Corps can earn corporate tax credits of up to $100,000 annually, and C Corps over $200,000 annually for those businesses that add energy saving equipment, air and water pollution control equipment, equipment for processing and manufacturing as well as research and development.? This welcome California tax credit alone can save your business up to ten percent of the after-tax cost of capital expenditures.

There are other California tax incentives that may be helpful to your employees.? Both employees and lenders may qualify for additional corporate tax incentives that lend another boost to the local economy.? Because of these generous tax incentives, businesses are encouraged to hire those who have been unemployed or are veterans, which helps individual employees tremendously and helps to reduce unemployment throughout the state while at the same time helping the company as well.

Your professional CPA can help explain corporate tax incentives and determine your company’s eligibility.

There is a common adage that says the only two things that are certain in life are death and taxes. While death is definitely not certain when it comes to a home business, taxes assuredly are. If you are going to operate a home business, there are some things you need to know about taxes or you may find yourself in a world of trouble.

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I can not think of one person I know who likes paying taxes, doing taxes or talking about taxes; but the fact of the matter is taxes are an inevitable part of life and if you start a home business, they are probably going to be an even bigger part of your life than they were before.

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When you work for someone else, your taxes are taken out of your paycheck and then at the end of the year, you simply file your tax return and you either pay money to the IRS or you get money back. Paying home business taxes gets to be quite more complicated than that. While income taxes are the main concern of those employed by others, home business owners need to worry about use taxes, sales taxes, employment taxes, income taxes and a number of other taxes that may apply to their business.

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The first thing you need to take care of in terms of home business taxes is the process of getting an EIN number. A business’ EIN number is much like a social security number for your business. It is the number that is used when reporting taxes to the IRS. Once you have your EIN number and your home business starts generating income, you are going to have to start making estimated tax payments to the IRS.

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Unlike the annual tax returns you filed when you were employed by someone else, home business owners have to pay taxes on a quarterly basis. For example, you are going to have to pay taxes on the money you make from January through March in April and for the money you make in April through May, you have to pay taxes on in June. The IRS provides home business tax payers with the Electronic Federal Tax Payment System in order to make paying your quarterly taxes more convenient.

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If your home business has employees, you are also going to have to take care of your employees’ income taxes. When you have employees, you are required to withhold their income tax from their paychecks and you must pay that income tax to the IRS. If you have less than one-thousand dollars in income tax liability each year, you can do this annually. However, if your employees’ income tax liability is going to total up to more than one-thousand dollars a year, you are going to need to pay the IRS either monthly or semi-weekly.

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Remember, this only applies to you if your home business has actual employees. Independent contractors are not considered employees and taxes do not have to be withheld from payments made to independent contractors.

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Home business owners also have to pay self employment taxes. Self employment taxes are taxes self employed people pay to Social Security and Medicare. This tax allows you to receive Social Security and Medicare benefits when you retire.

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If you are not sure how to manage your home business taxes, you should hire a small business accountant to consult with you on the best way to approach your tax requirements. Hiring an accountant who is willing to teach you how to do your own home business taxes can be much more cost effective than hiring an accountant who insists on doing all of your taxes for you without any explanation of what is being done.??

Tax Reduction and Cost Segregation – Myths and Facts

Tax tips and tax help to assist taxpayers by describing options
for tax reduction and tax cuts through lawful tax deductions.

Tax reduction and tax deferral are both generated by cost segregation. However, this tool is not well understood by most real estate investors and by many tax preparers. The root cause of limited understanding regarding cost segregation and how it provides tax reduction is limited dissemination of factual data on the subject.

The most prevalent myths include:

• Cost segregation does not provide tax reduction, only tax deferral.
• Cost segregation is too expensive. It only works for properties with a cost basis of $10 to $20 million or more.
• Cost segregation is risky; it is a tax shelter likely to cause an audit.

All three myths are simply incorrect.

Cost segregation provides tax reduction by converting income which would have been taxed at the ordinary income rate (35% maximum) to income taxed at the capital gains rate (15% maximum). During the ownership period, cost segregation generates additional depreciation real estate investors can use to shelter income from the property or other sources. In many cases this income would have been taxed at 35%.

Upon sale, the property owner and tax preparer will collectively allocate the sales price. In most cases, short-life property such as carpet, vinyl tile and paving have depreciated and the market value of these assets (at the time of sale) equals their depreciated cost basis. In this event, the additional depreciation is taxed at the capital gains rate. Hence, the real estate investor gains both tax reduction and tax deferral.

Cost segregation used to cost $20,000 to $50,000 per property and was only financially feasible for properties with a cost basis of at least $10 million. However, fees for cost segregation studies are now much lower. It generally makes sense to order a cost segregation study if the cost basis of improvements is at least $500,000. In most cases, the first year tax reduction is at least two to four times the fee for the study.

The myth about cost segregation studies being a risky scheme is completely inaccurate. A properly prepared cost segregation study is encouraged by the IRS since it generates more accurate accounting. The Audit Techniques Guide is a 100-plus-page manual regarding the background and proper methodology for a cost segregation report.

Both the advisors and appraisers (who perform cost segregation studies) have studied and understand the Audit Techniques Guide. Cost segregation studies are encouraged by the IRS. In private correspondence, IRS staff has indicated a cost segregation study does not increase the change of an audit.

If you are a real estate investor or use real estate in your business, ignore the myths and obtain a free preliminary analysis to determine if you could benefit from a cost segregation study and increase your tax reductions and tax deductions.

Click here for a FREE preliminary analysis of tax savings resulting from your property.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:

• Philadelphia, PA
• Boston, MA
• Denver, CO
• Memphis, TN
• San Francisco, CA
• Tampa, FL
• Hartford, CT
• Atlanta, GA
• Miami, FL
• Orlando, FL
• Allentown, PA
• Harrisburg, PA
• Lancaster, PA
• Greenville, SC
• McAllen, TX
• Tulsa, OK
• Charleston, SC
• Chattanooga, TN
• Palm Bay, FL
• Oxnard, CA
• Madison, WI
• St. Louis, MO
• Columbia, SC
• Lakeland, FL
• Youngstown, OH
• Knoxville, TN
• Detroit, MI
• Columbus, OH
• Des Moines, IA
• Cincinnati, OH

Cost segregation produces tax deductions for virtually all property types.

Property Type:

• Fast food restaurant
• Department store
• Auto dealer
• Convenience store
• Service center warehouse
• Self-storage
• Drugstore
• Land
• Multifamily
• Medical facility

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

• Automotive parts distributors
• Frozen food manufacturing
• Apparel manufacturing
• Electrical component manufacturing
• Plastic and rubber products manufacturing
• Publishers
• Textile product mills
• Building supply dealers
• Wood product manufacturing
• Golf courses and country clubs

O’Connor & Associates is a national provider of investment real estate consulting services including commercial real estate appraisal, tax deductions, cost segregation, property tax, tax reduction, market research, highest and best use analysis, partial interest valuation, financial modeling, Brazoria county appraisal district, Tips and Tricks for Appealing Your Property Taxes in Galveston, Galveston county appraisal and Federal tax reduction. Appraisal services are provided for all commercial property types including nursing homes, discount stores, truck terminals, tennis clubs, supermarkets, country clubs, medical offices, mini-warehouses, restaurants, vacant lands, skating rinks, community shopping, centers, power centers, car wash facilities and service stations.

When you are ready to prepare your income tax forms, you may benefit a lot from using free income tax software downloaded online. Such downloaded income tax software programs can simplify doing your taxes employing three of the basic steps essential during income tax preparation.
Free income tax software provides a more convenient data entry procedure to individuals. Manually entering relevant tax data may result in errors at times. Such errors can be reduced through the use of income tax software that you can download for free. Most software programs make use of different data collection methods to input the required data for your income tax return. Most makes use of virtual interviews that asks you to answer pertinent questions that the software programs then use to fill out the appropriate forms and will automatically calculate your income tax return.
Free income tax software also provides a more accurate review of your tax return. Most programs have alert features that automatically review your return for errors, update you on any missing information, offer tax money-saving advice and suggestions and more. This wonderful feature makes sure that you prepare your income tax return as accurately and as transparent as possible.
Income tax software programs online may also help make filing your tax return more convenient. Such free and downloadable software programs allow you choose how you wish to file your tax returns. One option is printing completed IRS-approved forms and schedules that you can file at the tax office yourself. For more convenience, you also might consider the option to file your tax returns online. Not only it is such a time saver, online tax filing can streamline the whole tax process so that you get to enjoy an even quicker refund.
Not only that, income tax software can also offer you secure online tax preparation that you can do anytime and access from anywhere. Certain programs online make use of their own data storage facilities that allow you to store your tax data online that you may be able to retrieve when you need it.
Free income tax software can also help maximize deductions by always giving you a full list of possible income tax deductibles. The software might also be able to help you calculate and add up the tax deductibles that are relevant to your tax situation. Being able to maximize on your tax deductibles may allow you to get back all the money that you deserve.
Is it that time of the year when you need to file that piece of paper that will define your citizenship in the land of the free and the home of the brave? Are you one of those IRS employees thinking and wishing that there was a better way to do these things?
Are you sick and tired of getting that little note from the government saying you are subject to investigation for fraud?
If you answered yes to all the question then maybe you are in need of an intelligent little helper that could solve all your problems with just a push of a button or maybe were exaggerating. But it is true that you can be helped.
The question now is how and what. With the advent of modern technology people have found ways of connecting other people between oceans, across deserts, and even in space. People have made startling discoveries in science and in health. Cancer can be cured, obesity can be solved even aging can be slowed down.
Almost everything is possible now, thanks to the help of technology. So why is it that you can’t do anything about your taxes?
LEARNING ONLINE TAXATION
Now there are ways, all across the Internet you will be able to find people who are offering income tax software. These software products range from a simple income tax calculator to the auditing software. Pretty amazing isn’t it? Especially for those who are not that endowed with the prowess for numbers and their computation.
Income tax software products can also be beneficial to the people in the IRS. We all know that no software was ever invented to fully automate our lives, but with the help of this new product we can at least give ourselves some time to take control.
Income tax software products are based on one simple need, the need for an auditor. We all know how much hiring and accountant costs and we all know that not all of them are good. Human error is still a factor when hiring people.
Most of the error that they commit would cost us more money than we originally paid for to get their service. The use of computers would eliminate human error when doing our tax reports. Because computers are not influenced by human emotions we are assured that they are 99.9 percent accurate and they are not influenced by any out side factors.