Here is an update on the two major tax representation firms, Tax Masters and JK Harris – companies who spent millions of dollars on advertising for tax representation clients.

TaxMaster’s Fate

In Texas a jury has returned a $195 million verdict against Houston-based TaxMasters, Inc., for violating the Texas Deceptive Trade Practices Act.  The TaxMasters CEO made hollow promises about fighting for taxpayers and their pocketbooks in television ads.  The evidence proved that the firm didn’t even bother to show up when it came time to fulfill those promises;  instead mislead and defrauded their customers.  Can you speill S-C-A-M?

Taxpayers, who been offered free consultations with tax specialists by TaxMasters, were instead linked to specialists trained in sales, not tax matters.  TaxMasters would do no work until all it’s fees were paid up front;  you can imagine the anxiety and panic this triggered in people who were having 90 per cent of their pay check levied or their bank accounts seized. Currently TaxMasers has filed for bankruptcy following on the heels of another Tax Resolution company JK Harris.

JK Harris’s Fate

JK Harris is currently being liquidated due its recent bankruptcy leaving creditors and clients in a lurch.  The bankruptcy was sought to pre-empt Texas Attorney General Greg Abbott who had charged JK Harris & Company, LLC with materially misrepresenting their ability to help taxpayers resolve their unpaid tax obligations.

According to the state’s enforcement action, JK Harris failed to :  provide promised services, misrepresented its employee’s professional skills and experience, and overstated its ability to reduce debts it owed to the Internal Revenue Service.  Further JK Harris accepted large, prepaid fees from customers whose tax liabilities the firm knew – or should have known – it could not reduce.

What To Do Now?

Thousands of taxpayers across the country, who paid these firms, are now left at the mercy of the IRS;  they are in desperate need of qualified tax help. Tax Crisis Institute is fully prepared to help individuals pick up all the pieces and deal with the IRS. Call us today.

Dana M. Ronald

Tax Crisis Institute

May 10, 2012

If a taxpayer has income of 100 to 500 thousand dollars a year or even higher and owes tax debts he or she cannot pay, can a chapter seven bankruptcy be filed to discharge the taxes?  Secrets exposed – Yes!

There are some hoops you have to go through:  the taxes must be income and not payroll trust fund taxes; the usual timing rules have to be met;  and most important the amount of tax debt must exceed the amount of consumer debt.

If the amount of tax debt exceeds the amount of consumer debt, you are not a consumer debtor and subject to the means test of BAPCPA nor

the disposable income rules from pre-BAPCPA.

There are some court cases that are troublesome with SFRs…assuming no fraud – the tax debt can be bankrupted regardless of income.

The assumption on no fraud is an important one here; a high income taxpayer may be held to a higher standard than other taxpayers.  Some courts have taken the position that the only act necessary to establish fraud is the failure to pay the tax at a time when the tax payer had the money and used it for other spending – almost like a trust fund standard.

If you are contemplating such a bankruptcy for relief from your tax debt, you cannot use one of these tax relief firms that advertise on television.  The result will be worse than a veterinarian attempting brain surgery.  Frankly even most brick and mortar bankruptcy attorneys are blown out of the water, when confronted with the challenge of bankrupting such debts.

Dana M. Ronald

Tax Crisis Institute

May 4^th, 2012

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