In our particular line of work, we are particularly aware of the effects the economy is having on Americans of all walks of life. We know our clients often come to us because the tax problems they are facing are overwhelming and may potentially cause them great hardship. Wage garnishments and/or levies often cause families to struggle; we work hard to help our clients get them released so their pay isn’t affected month after month.

Recently, we wrapped up our company’s first payroll deduction campaign for Trident United Way. At the launch of the campaign, we had several guest speakers come out to speak with our employees about the charitable organizations their donations would be supporting. One that particularly touched our employees was a local neighbor of ours, Helping Hands of Goose Creek.

Helping Hands of Goose Creek provides temporary assistance to people and families who meet their stringent criteria. They provide food and personal hygiene items to people in the midst of hardship. Right now, they are working overtime to collect enough food to provide each recipient with the makings of a Thanksgiving meal. According to their director, they can never keep enough personal hygiene items (shampoo, toothpaste, toothbrushes, soap, etc.) on the shelves for all the people who need them.

Knowing the demand placed on their organization has grown and the idea of making a direct impact on our local community touched several of our employees. We started a nonperishable food drive and personal hygiene item drive to help these folks at this, the beginning of the holiday season. Many of our employees themselves have been impacted by the current economy, but it only takes a small donation – one can or box of food, to help a neighbor and our employees are reaching out to do just that.

The IRS just issued a news release detailing how they will redistribute tax refund checks that were sent to the wrong address.

The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Click here to read more.

Posted by JK Harris & Company

The State of Oregon is offering taxpayers tax amnesty – a chance to get caught up. Tax amnesty is an opportunity for taxpayers to file or amend tax returns in exchange for a waiver of penalty and partial interest. This program is only available to those who have not yet filed their back taxes, who already owe a tax debt and does not apply to tax year 2008.

Important things to know:

* Applications must be filed between October 1, 2009 and November 19, 2009.
* Tax returns must be filed between October 1, 2009 and January 19, 2010.

What taxes and tax periods are included?

Amnesty is available for all tax years or periods prior to 2008.

* Personal Income taxes,
* Lane and Tri-Met Transit District self-employment taxes,
* Corporate income and excise taxes, and
* Trust and estate income taxes.

Inheritance tax returns originally due before January 1, 2008. This means the date of death must have been prior to April 1, 2007.

What are the benefits of participating in tax amnesty?

* Full waiver of all penalties otherwise due under Oregon law; penalties can be more than the actual tax owed.
* Waiver of half the interest owed.

Who qualifies for tax amnesty?

* Taxpayers who have past due tax returns,
* Taxpayers who have filed returns but need to amend them.

Who does not qualify for tax amnesty?

* Taxpayers who already received a bill for tax from the department for a year they’d like to apply for amnesty.
* Taxpayers who need to file returns for
o tobacco taxes;
o employer withholding taxes; or
o tax programs not specifically stated above.

You will get amnesty if you meet all the above requirements, and:

* File an amnesty application with the Department of Revenue between October 1, 2009 and November 19, 2009. Your application must ask for amnesty on all required years.
* File your returns no later than January 19, 2010.
* Pay the entire tax liability plus one-half of the interest due.

Remember, you must write “Amnesty” across the top of all returns filed under the amnesty program. No extensions are available for the amnesty program. It would be wise to take advantage of this program while it is being offered. You will save money on interest and penalties (penalties can add up to more than the actual amount of taxes owed), while helping to alleviate the stress of knowing you have not filed your past tax returns.

Posted by JK Harris & Company

The IRS is reporting on two expansions of energy saving tax credits that can help tax payers save money, provided they save energy. Here is the release from the IRS newswire:

People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.
The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the non-business energy property credit and the residential energy efficient property credit.

Non-business Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.
By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.
Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.
Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits. A draft version of this form is available now on IRS.gov.

Posted by JK Harris & Company

This article is a sad reminder that the IRS won’t go away in life, and in death. Anna Nicole Smith is now another celebrity victim of back taxes, as the IRS issued a Tax Lien on the now deceased actress’ estate.

According to WebCPA:

The Internal Revenue Service has filed a $125,112.86 federal tax lien against the late Anna Nicole Smith, nearly two years after the former Playboy Playmate of the Year and reality TV star died.

The tax lien, was filed in December 2008. Anna Nicole Smith, whose real name was Vickie Lynn Marshall, died in February 2007 of a prescription drug overdose. The California State Franchise Tax Board also billed Smith’s estate in September for $43,280.66 in unpaid taxes from her 2007 return, along with penalties and interest.

A preliminary hearing into Smith’s death is currently taking place in Los Angeles to determine whether there is enough evidence to show that her former lawyer and companion Howard K. Smith and two physicians should stand trial for illegally providing her with prescription medication.

Posted by JK Harris & Company.

If you have dealt with back tax issues within the last ten to fifteen years, you have probably heard the term Offer in Compromise. Maybe you have done some research in regards to the IRS Offer in Compromise program, depending on how serious your tax problem was. Tens of thousands of people submit Offers in Compromise each year to the IRS. With all of these people participating in the program and all of the success stories you hear about it on the Internet, or on television, why shouldn’t you do it? Let’s answer that question, by digging further into what an Offer in Compromise is and how it works.

The Offer in Compromise program was originally created by the IRS and later adopted by many states. It allows a taxpayer to settle his or her tax debt for less than the amount they actually owe. Sounds great, right? I don’t have to pay as much as I originally owed and I get myself out of tax trouble. Unfortunately, it’s not that easy. You cannot simply apply for an Offer in Compromise and have your tax debt automatically lowered; you must meet a number of qualifications. The first criteria you have to meet is the one that disqualifies most people from the program: you have to exhibit an inability to pay the tax debt you owe. The IRS will look at how much you earn each month, your monthly expenses, and all of the equity that you have in assets (I.E. bank accounts, vehicles, investments, etc.) when determining your ability to pay the debt and/or qualify for an Offer in Compromise. This investigation process is very long and tedious. It can be extremely difficult for someone who is not a trained professional. The IRS requires a number of forms be prepared when submitting an Offer in Compromise and numerous supporting documents must be sent in to back up your inability to pay. The paperwork can seem to be a never-ending process, as the IRS requires up to date financials.

The second criterion you must meet is compliance from the time you submit your Offer in Compromise forward. What is compliance? Compliance is an IRS term, which describes your status in regards to filing tax returns and paying tax debts. You are only deemed to be compliant if you have filed all of your tax returns in a timely fashion and have resolved all back tax debts incurred while participating in the Offer in Compromise program (I.E. You file for an Offer in Compromise in 2005, it is accepted in 2006 and you owe a tax balance for 2007. You must pay the 2007 balance on time, or you are deemed to be non-compliant, you are removed from the Offer in Compromise program and you are back to owing the original tax debt plus penalties and interest.)

Above and beyond the two criteria mentioned above, you also have to pay a portion of the Offer in Compromise amount up front for certain Offer in Compromise types and a non-refundable $150 processing fee.

With all of this information in mind, the Offer in Compromise can be a very beneficial program to the individuals who qualify for it. It is not a magic wand to erase all of your tax debt without any work and it is definitely not designed to allow you to hide assets or money from the IRS. If you have back tax debt and are considering an Offer in Compromise, I would recommend consulting someone experienced in handling OICs, as opposed to embarking on this journey on your own. There are very reputable companies that have years of experience in dealing with the IRS, such as JK Harris and Company. Any time you have a tax issue, it can be a very scary and trying experience. Hire a reputable firm, keep good records and be honest throughout the process. It will go a long way toward resolving your tax issues.

If you filed an extension to file your income taxes, time is up! Today is the deadline to e-file or mail in your federal tax return. Remember, the failure to file penalty can be quite steep, so even if you owe taxes and cannot pay them all at once, get that return submitted. You can make payment arrangements with the IRS to repay your tax debt, but they do not look kindly on taxpayers who completely fail to file a return.

The other important deadline today is for an IRS amnesty program created to get tax dodgers back into the U.S. tax system. Started in March 2009, the program was set to last for six months, but the IRS extended the deadline to October 15, 2009.

According to the Associated Press, some 7500 people with bank accounts in more than 70 different countries and on six of the seven continents have applied for amnesty under the program. Senator Carl Levin, who has worked for years on the issue of tax evasion, estimates the U.S. loses $100 billion a year in tax revenue due to money being sequestered in offshore bank accounts.

The amnesty program allows these people to come forward without fear of jail time, so long as they pay their back tax debt. The IRS has long had a policy in place where tax evaders could avoid jail time by coming forward before being contacted by the agency, but the tax evader had to pay their back taxes owed, along with heavy penalties and interest. The amnesty program offered reduced penalties to sweeten the deal.

The IRS is looking to gain information from the tax evaders to go after bankers and tax advisers who helped them hide their assets.

If you filed a six-month extension to file your 2008 return, the October 15th deadline is fast approaching. For most taxpayers, it is the last day to get your 2008 federal tax returns filed on time. Remember, your return must be postmarked October 15th, or if e-filing, you can still use the Free File program, available through October 15 with the IRS. The IRS is encouraging taxpayers to file electronically since electronic returns tend to have fewer errors than paper returns.

If you wait to file until after the October 15th deadline, it is possible you could be hit with failure to file penalties and interest if the IRS determines you owe taxes. According to the IRS, the failure to file penalty for returns filed more than 60 days late is the smaller of $135 or 100% of the unpaid tax. Interestingly enough, the failure to file penalty is generally more than the failure to pay. This means, even if you know you owe the IRS, you should file your return in a timely manner and settle your tax debt before the penalties and interest compound.

There are a few exceptions to these rules: military members serving in Iraq, Afghanistan and other combat zone localities, people affected by recent natural disasters may file after October 15th and those taxpayers who have paid over 90% of their owed taxes by the deadline will not be hit with the failure to pay penalty.

In a move designed to help Virginia taxpayers get owed back taxes paid off, Governor Timothy M. Kaine launched “Get Square VA.” The program is being administered by the Department of Taxation and is offering amnesty to taxpayers who pay their back taxes between October 7 and December 5, 2009. This means that most delinquent taxpayers – business or individuals – may pay their back taxes during this limited window with no penalties and half of the normal interest charges.

This program will be applicable to most taxes administered by the Department of Taxation. Qualifications details are available at the Get Square VA website.

In recent weeks, a phony e-mail claiming to come from the IRS has been circulating in large numbers. The subject line of the e-mail often states that the e-mail is a notice of underreported income. The e-mail may contain an attachment or a link to a bogus Web page directing taxpayers to their “tax statement.” In either case, when the recipient opens the attachment or clicks on the link, they download a Trojan horse-type of virus to their computers.

Malicious code (also known as malware), of which the Trojan horse is but one example, can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scammer. The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more.

The IRS does not send unsolicited e-mails to taxpayers about their tax accounts. Anyone who receives an unsolicited e-mail claiming to come from the IRS should avoid opening any attachments or clicking on any links. People can report suspicious e-mails they receive which claim to come from the IRS to a mailbox set up for this purpose,phishing@irs.gov. Those who believe they may already be victims of identity theft should find out what do by going to the U.S. Federal Trade Commission’s Web site, OnGuardOnLine.gov.