There are three (3) categories of OIC’s: Doubt as to Collectibility; Doubt as to Liability; and Effective Tax Administration. Doubt as to Collectibility means that the IRS believes that it will not be able to collect the full amount of the tax owed based on the taxpayers ability to pay. Doubt as to Liability means that there is a legitimate doubt that the taxpayer owes the amount the IRS has assessed to the taxpayer. Effective Tax Administration is where although there is no doubt that the taxpayer owes the taxes and the taxpayer could pay the taxes, exceptional circumstances exist which allow the IRS to waive the amount due when the taxpayer demonstrates that it would create an economic hardship.
Tax laws may seem complicated depending on the state you are in. Florida tax attorneys may have different legal advice compared to a tax attorney in China. This is because the tax system of different states is diverse. Tax law, which is a codified system of laws that covers government levies on certain business or economic transaction, imposes taxes. These taxes are delivered back to taxpayers by way of government projects. If you failed to do your duty as a taxpayer, you will be punished.
Due to a confusing and arguably unfair provision in Federal Law, military spouses may be paying taxes twice on military benefits. There are an estimated 57,000 military spouses who may be affected by this Federal provision. These are spouses who received Federal benefits as a result of their late spouse’s military service and have now remarried. After the military spouse passes away and the surviving spouse has begun to receive benefits, in the event that they remarry, the Federal Government can request the full amount of the government benefits to be repaid. If the surviving spouse does not cooperate and set up a repayment plan, the government can begin garnishing funds to be repaid. The problem is that when the surviving spouse received the benefits initially, they paid taxes on the benefits. When they repay the benefits to the government, they are required to pay the full amount back, so they are essentially paying taxes twice on benefits they will never have received.
How is this possible you may ask? The fact is, unemployment is an insurance program that employers contribute to, it is not a welfare program based on need.
So, regardless of your income level, if you have lost your job and your employer paid insurance benefits, you are entitled to make a claim.
I hear varieties of this question frequently in my office. In this week’s blog, I have taken two examples from newspaper articles of examples of individuals who violated different sections of the tax code and unfortunately ended up in prison.
Debt indicators released by the IRS are those that indicate whether the taxpayer will receive any tax refund, and if that refund would be offset by payment of delinquent taxes, student loans or child support.
Tax preparers and payday loans companies use this information to process Refund Anticipation Loan (RAL) or RAC (Refund Anticipation Checks).
American taxpayers will be expected to fork out more of what they earn, both during the years of the current recession and when it comes to filing their annual returns for years to come. That’s why consulting with a professional is important when preparing returns and in the event that taxpayers are audited.