Such bias can trigger anger, frustration, and self-inflicted depression and hopelessness on a taxpayer against a tax agency that appears to be a law unto itself.

The good news is “Be Happy.” Happiness is a choice. You can choose to be happy.

In 100 A.D., Epictetus, a Greek Stoic philosophy once said, “What disturbs people’s minds is not events, but their judgments on events.” Abraham Lincoln said “A person will be just about as happy as they make their minds to be.”

What distinguishes man from plants and animals is the ability to think. We have control over our reaction to events; it is enormously important to realize the key to happiness is to understand happiness is a choice.

We will all die…this makes every moment of life precious. The more we understand about happiness, the more power we have to achieve it; the more often it will become a choice!

When you hire Tax Crisis Institute, we fight to death – we are our enemies worst nightmare. The pressure of a tax debt, wage levy or court action couldn’t be anything but a source of unhappiness. In hiring us you have made a plan of action to deal with the situation; dwelling further on the situation will not help and will just generate unhappiness. Let it go, put it in our hands and be happy!

Kind regards,

Dana M. Ronald
Tax Crisis Institute
1/13/12

The foundation for this was laid with the creation of electronic filing.  The IRS is now pursuing the development of real time access to all public and private data bases in the country, via the web, embedding core third-party information into their pre-screening filters.  The intent is to match a return as it comes to these data bases.  The IRS will reject the return upfront if the data on the return does not match.

Like Orwell’s 1984, this tax directive creates a ubiquitous IRS that attempts to be able to know everything you do, when and how you do it.  The IRS has been pushing for years for more laws requiring more information return filing with the Agency.  These laws are a manifestation of the IRS’s goal to know everything about you.

As of 2012, three new information return requirements will become effective.  The first and most important applies to credit and debit card sales for businesses.  Credit card processing companies are now required to file reports with the IRS showing the gross amount of payments made to businesses through their credit and debit card sales.

Only five years ago, the majority of business bank deposits were cash and checks;  today over 85% of business bank deposits are electronic through credit and debit card sales.  If your business processes credit and debit cards, and the gross receipts on your tax returns do not match what is processed through the credit card processors, you are sitting on a time bomb of an audit problem with the IRS and need to contact us.

Second, most brokerage houses will be required to report basis information on most securities purchased in 2011, and all of them in 2012.

Third, offshore banks that have entered into reporting agreements with the U.S. Treasury must file Form 1099s to report interest, dividend and capital gain income on U.S. citizens to the same extent that U.S. Banks must file such reports.

For years, the IRS was pushing Congress for broader requirements for filing 1099 forms on business transactions.  One such requirement would have imposed on business the duty to file information returns on their transactions with other businesses, even corporations, if $600 or more was paid to a corporation in a given year..

This was finally passed as part of Obama’s healthcare reform legislation.  When the Bill finally passed,  critics reviewed the massive act and were outraged to find buried among the thousands of pages of edicts and directives this new mandate.  There was outrage everywhere, even with the very Congress that passed the bill.

Other issues subject to appeal:

1. Denial of penalty abatement request
2. Rejection of termination of Installment Agreement
3. Denial of Audit Reconsideration
4. Denial of Offer in Compromise
5. Assessment of Trust Fund Recovery Penalty
6. Denial of Claim for Refund

There are four common varieties of audit determinations:  The correspondence audit, Math error notice, Face-to-face examination and Non-filer determination.

1.  In a correspondence audit the IRS issues a CP 2000 –”We changed your account.”  These are commonly issued when 1099s for dividends, interest or miscellaneous income are issued, but the income does not match the tax return.  In 2012 1099Ks that match the gross receipts processed through credit card processors will be matched to tax returns.  Taxpayer submits a Protest letter within 30 days.
2. In a Math error notice the IRS issues a CP 12 or CP 21 –”We corrected your account.”  This constitutes a “summary assessment.”  Per IRC Code sec 6213 taxpayer must demand abatement within 60 days.  IRS has the duty issue a Notice of Deficiency.
3. Face-to-face examination – “We completed the audit.”  The 1099K matching program will generate a logjam…expect expanded Face-to-face examinations.  Submit a written protest letter within 30 days.  The case is forwarded to Appeals Office for consideration.
4. Non-filer determination – “You didn’t file, we filed for you.”   This Substitute for Return determination…SFR… is subject to deficiency procedures.  Submit a Protest Letter if tax is “proposed”; submit an abatement request if tax is “assessed”;  file a Tax Court Petition if a Notice of Deficiency is issued.

Dana M. Ronald
Tax Crisis Institute
November 28, 2011
866.751.9829

Two Internal Revenue Code provisions allow for the recovery of fees and costs.  IRC Code sec 212(3) provides an itemized deduction for out-of-pocket fees and costs.  IRC Code sec 7430 provides for a reimbursement of out-of-pocket fees/costs.

IRC Code sec 212(3) reads as follows: “In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenes paid or incurred during the taxable year -

(3) in connection with the determination, collection or refund of any tax.”

This deduction is very broad.  The deduction applies to -

1.  Audit, collection and refund cases

2.  Federal, state or local taxes

3.  Income, estate, gift, property or “any other tax”

4.  Fees for tax counsel or expenses of the case, and

5.  Preparation of tax returns.

Revenue Regulation 1.212-1(d) specifies the expenses must be “ordinary and necessary.”  If you are in a 28 per cent federal and 9/3 per cent state tax bracket, the tax agencies are effectively paying almost 40 per cent of the fees you pay Tax Crisis Institute to defend you.

The deduction is treated as a miscellaneous itemized deduction and claimed on schedule A.  The expense must exceed two per cent of AGI and the deduction is claimed in the yar the expense was incurred.

Regards,

Dana M. Ronald, Tax Crisis Institute

When the IRS or a State tax agency continues to collect while the Taxpayer is under an automatic stay or continues to collect after a discharge by the Bankruptcy Court, the Taxpayer may sue for damages including attorney’s fees and costs;  in some cases a tax collector may be jailed for contempt of court.

If the tax debt is not discharged in a chapter seven case, we can sue the tax agency and the individual tax collector and all who signed off on the levy per automatic stay 11 U.S.C Sect 362.  If the Taxpayer has been discharged, we ask for the Court for contempt for violating the “post discharge injunction.”

We first send notices to the Special Procedures Unit who is the internal IRS group who handles bankruptcy issues.  The person and his or her Identification number are located who has been assigned the case.  A letter is sent certified mail explaining these taxes are dischargeable and provide appropriate statutory authority or case law, if necessary.  In addition, we put them on notice that we will take enforcement action in the Bankruptcy Court against the IRS or the tax agency, if they levy, file a lien or do anything in violation of the automatic stay or “post discharge injunction.”  We will ask them to confirm that we are correct and that the taxes or dischargeable; or in the alternative what authority they feel supports the position the taxes are not dischargeable.

If the Special Procedures stonewalls us, we do not fool around.  A Motion For An Order to Show Cause Re: Contempt is immediately filed with the Court.  Depending upon the outcome of the Show Cause hearing, jail may be an option for renegade tax collector.

Regards,

Dana M. Ronald, Tax Crisis Institute