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What is a Private Letter Ruling When It Comes to Taxes?

What is a Private Letter Ruling When It Comes to Taxes?

By on Dec 20, 2019 in IRS | 0 comments

A private letter ruling or PLR might sound complicated, but it’s a straightforward set of facts. A PLR is an official letter of advice from the Internal Revenue Service (IRS). They ideally provide a favorable ruling. It’s a piece of suggestion that you are highly advised to take!   If you’ve received a PLR, it’s because you or your tax representative requested it. A PLR is just a written decision from the IRS that’s responding to your request for guidance. So if you’ve received a PLR in the mail, it shouldn’t come as a surprise to you.   Why Even Request A PLR? PLRs are issued from an Associate Chief Counsel Office of the Office of Chief Council, or by the Tax Exempt and Government Entities Division. They determine what type of action you should take in regards to your own specific tax situation. This ruling is strongly based on current tax laws. Oftentimes, the PLR is providing you and/or your tax representative with the right method of guidance to resolve any complex issues about your tax situation.   Any private letter ruling represents a formal written decision made by the IRS. These rulings bind the individuals involved, which includes the IRS. In some cases, the IRS will actually redact the personal content associated with a single document.   When they do this, it gets issued as a revenue ruling. In that case, the document becomes binding for all taxpayers in the country and every last IRS agent around.   Since these rulings are always listed publicly, you won’t have to worry about ending up beholden to regulations that you’d never be able to find. Those who are interested in boning up on some additional tax policies can visit the IRS informational directory for more information on public rulings as well as all the laws they’re required to adhere to when filing.   Always Seek Council About Tax Matters Not everyone’s tax issues are the same. That’s why it’s advised to seek out a PLR so that you’re not blindly taking unnecessary steps to try to ease your financial situation. Doing so will only lead to delays and the possibility of missing your deadline which can result in late penalties...

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IRS Penalty Abatement Sample Letter

IRS Penalty Abatement Sample Letter

By on Dec 19, 2019 in IRS | 0 comments

Contrary to what you may have heard, the IRS does not want to penalize everyone who misses their taxes. They would rather make arrangements to reduce tax debt and receive what you owe for a given year. You often have to pay a penalty first, and several more, before the IRS takes drastic action. Many taxpayers would rather handle the penalty if they miss a payment on their tax return.    If you owe back taxes to the Internal Revenue Service (IRS) and have recently been assessed a penalty for this debt, you are allowed to request relief for this penalty if you have a valid reason. While the IRS may not make the process simple, we can provide the details. This relief is called a penalty abatement. What Is Penalty Abatement Penalty abatement is an administrative waiver that the IRS gives to people who miss a tax payment. This tends to be a first-time basis, so people that don’t pay for several years or tax periods may not have access to this resource. You also are getting a waiver on the penalty itself rather than the taxes you owe.  You can get first-time penalty abatement for the following situations: failure-to-file, failure-to-pay or failure-to-deposit penalty. Essentially, if you miss a payment, don’t file a tax return, or make a deposit, then you have a chance to avoid the penalty. You can’t get the first-time abatement for other circumstances.  There are two ways to apply for penalty abatement. You can either draft a letter and send it, or call the IRS and talk to one of their agents We recommend sending a letter so that you have a paper trail and documentation. Also, you won’t be waiting on hold for hours at an end and dealing with an agent that has to sift through their policies. Only call if you cannot wait for the time it takes to send a letter either by post or overnight. Drafting A Penalty Abatement Letter Applying for penalty abatement is fairly straightforward. You can qualify for this relief if you provide and fulfill one of the following requirements: You did not previously have to file a return or you have no penalties for the 3...

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Can the IRS Seize Your Bank Account Without Any Notice?

Can the IRS Seize Your Bank Account Without Any Notice?

By on Dec 12, 2019 in Bank account levy, IRS | 0 comments

“IRS took money from my bank account. Can it do that?” If you owe the Internal Revenue Service (IRS), and they have attempted to contact you about this issue multiple times, and you’ve not responded, then yes, the IRS can seize your bank account. But the real question is: “Can they do this without any notice?” The answer is no. The IRS is supposed to give you several opportunities to pay your taxes. This is mainly done by mail. While other forms of communications can easily get hacked, and even some can impersonate an IRS representative over the phone, the good old fashion United States Postal Service still has proven to be reliable. Although, there are some scam artists who may also send mail disguised as the IRS. So if you’ve received a letter from the IRS, address it! Whether you think it’s legit or not, you’ll be better off verifying the document with the IRS first. Unfortunately, you may have to waste some of your valuable time doing this, but it’s better to make sure that the letter is valid rather than to assume it’s a scam. Either way, the IRS ought to be notified. Do keep in mind that you should contact the IRS directly regardless of whatever information was printed on the letter. There’s a chance that scammers might include some sort of bogus contact information. Uncle Sam, however, always lets you get in touch with the IRS on a relatively direct basis. That being said, you have to act fast in order to avoid incurring some kind of future penalty or the dreaded seizure of an important account. If you’re worried about whether or not the IRS will take money from your bank account, there are several steps that need to happen before that can take place. And a lot of that has to do with you not being negligent. If you prefer to avoid the IRS seizing money from your bank account to pay off your tax debt, there are a few things you can do to prevent this: How to Avoid IRS Seizing Money From Your Bank Account 1) Communicate Believe it or not, the IRS appreciates it when you communicate with them...

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The Difference Between Tax Relief and Tax Break: Why Get Tax Relief Now Instead of Later

The Difference Between Tax Relief and Tax Break: Why Get Tax Relief Now Instead of Later

By on Dec 12, 2019 in IRS, Payroll Tax Problems, Tax Resolution | 0 comments

Tax Relief is defined as any type of program designed to reduce the amount of taxes that an individual or business owes. As a result, it is one of the most coveted things taxpayers salivate over during the tax season, hoping they qualify. Definitions: Tax Relief and Tax Break Yet, tax relief is more than just getting a tax break. It’s also about receiving the service of getting a tax break. Sometimes, to get a tax break, it’s not as easy as entering numbers on a tax software system. If only! Often times, getting tax relief assistance can be a bit complicated depending on each taxpayer’s situation. When one thinks of getting tax relief assistance, the thought of being millions of dollars in debt, often comes to mind. It is usually dismissed as celebrity problems that Martha Stewart, Wesley Snipes, reality star Teresa Giudice—people with ‘real’ money have. Yet, that is not so. Seeking tax relief service is not designated only for the rich and is nothing to be ashamed of. In fact, one can benefit from tax relief service even if they are not in debt to the Internal Revenue Service (IRS).  What Kind of Issues Applies for Someone to Need Tax Relief?  There are a number of combinations that can lead to someone needing tax relief. It can be argued that if you qualify as a taxpayer, then you need assistance regardless of the amount you owe! At any rate, let’s take a look a few reasons why some may want to get tax relief now instead of later:  Missed a Year Filing Annual Taxes  Whether one has neglected to file their annual taxes or just honestly forgot, the IRS doesn’t really care! They want their money! The good news is if this is you and you haven’t received a letter from the IRS, you are in good shape. There is still time to rectify this issue by simply calling the IRS and letting them know your situation. You can expect to pay a late fee and other penalties, but the sooner you address this, the better for you and your financial situation.  Self-Employed Being self-employed gives you the freedom to be your own boss…and accountant! However,...

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Tax Settlement Services: How They Can Free You from Debt

Tax Settlement Services: How They Can Free You from Debt

By on Nov 5, 2019 in IRS | 0 comments

Going through the headache of trying to clear your debt without tax settlement services can be…well…taxing! Such a process will take up time that you don’t have. If you’re not in the tax profession, then you will most likely spend a great deal of your time going through a crash course on all things that are related to taxes. Debt often occurs when people cannot pay their taxes after filing a return. Many factors can play into this debt: changing laws for businesses, emergencies or natural disasters. Even so, the IRS keeps track of your tax liability. You would rather pay off your debt as soon as possible, but the amount can accumulate with interests and penalties. The more the amount accumulates, the more you have to pay in back taxes. In the worst-case scenario, the IRS will put a lien on your property or even press charges for imprisonment. With that said, the IRS offers debt settlement because the government understands extenuating circumstances. If you negotiate with them successfully, the IRS will agree for you to pay a smaller amount. That way you won’t have to worry about the original total. In some cases, you can even file for an offer in compromise which is another form of a settlement. You need to know the paperwork, however, and what factors can help or hinder your request. While the IRS does want to help you avoid jail time and with payment options, the language can become rather complicated. This process alone can be frustrating for the regular taxpayer. On top of trying to understand how tax settlements work, you owe the Internal Revenue Service (IRS) money! So, somehow, someway, you are supposed to first understand how tax settlement works. Then you need to convince the IRS all by yourself that they need to exonerate you from your debt. No pressure, right? Believe it or not, many taxpayers go through this learning curve. Some are successful, but the majority of them aren’t. Many taxpayers who have attempted to get the IRS to free them from their debt end up spending more money. They have to pay a tax relief service to undo what they did. They were trying to take...

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IRS 1031 Exchange Rules: A Simple Definition

IRS 1031 Exchange Rules: A Simple Definition

By on Oct 23, 2019 in IRS | 0 comments

When you have assets, you always want to make sensible business decisions. That means knowing when you should sell or buy certain properties in the United States, and when a gain or loss will happen. You want to ensure that property being sold provides more value.  United States Rules For Real Estate Normally on personal property, you have to pay a tax on selling the estate towards the government. This tax is called the capital gains levy because it takes a percentage of the profit of a property sale. Those profits are capital gains for the seller.  There are some exceptions to paying a tax on capital gains. Per the Taxpayer Relief Act of 1997, a single homeowner doesn’t have to pay taxes on the first $250,000 from the sale while married couples don’t have to pay up to $500,000. You qualify for this exemption by living on the property from two to five years and designating it as your primary residence.  What 1031 Means To Real Estate Investors A 1031 exchange means that you purchase a property after selling your original investment, and both are equivalent in value at a minimum. In some cases, the new property can even be worth a higher value. 1031 is a tax-deferred exchange, which means that you don’t have to pay capital gains on the sale.  To engage in a 1031 exchange, you need to choose a qualified intermediary to hold the funds from the initial sale, which will then be reinvested into purchasing another property. A qualified intermediary can either be a person or a business with no conflicts of interest or relationships with either the buyers or the sellers. They have to serve as a neutral party.   Investors have multiple incentives to invest in this exchange. The tax deferral is one such incentive, to avoid paying on capital gains. You can also consolidate all of your property assets and streamline management, so as not to juggle hats, and recapture deprecation on estates that lose value every year.  1031 Rules For Exchanged Property How do you qualify for a 1031 exchange? First, create a purchase and selling schedule. You have a time window to locate this replacement within 45 days, and...

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