Change is inevitable, especially in the tax world…

It’s been a wild ride for the past two years in the magical land of Taxlandia.

We’ve seen shifting IRS enforcement priorities, endless debate about the Bush-era tax cuts, burdensome new reporting requirements, and the dawn of IRS oversight of non-U.S. financial institutions with the passage of FATCA. Who would have thought we’d see a day where Swiss banks lifted the secrecy provisions they’ve maintained for eons, let alone see the devaluation of the Swiss franc?

We’ve seen five European nations declare the insolvency of their financial systems. Here at home, we’ve enacted an individual health care mandate that will be enforced through the IRC, and operated our Federal government without a firm budget solution for two entire fiscal years now.

In tax resolution, we’ve witnessed the bankruptcy or regulatory shutdown of the five largest national tax resolution companies, creating massive market opportunity for smaller firms. The IRS has expanded streamline resolution criteria, and fixed what I considered to be the most egregious flaw in the Offer in Compromise program, the remaining income multiplier for calculating RCP. Who would have guessed that they would ever actually fix that problem?

On the marketing side of things, we’ve seen the debt settlement provisions added to the Telemarketing Sales Rules, which gave us all momentary pause until the temporary exclusion of tax debt settlement was announced, but which still leaves many people asking questions since it’s not really settled yet.

When James and I first sat down two years ago to create a web-based platform for cost effectively delivering tax lien sales leads to tax practitioners, the TSR debt settlement provisions hadn’t been announced. The month we went live with this web site, the provisions came into force, causing a slight shift in our own long range business plan.

Acknowledging that change is inevitable is healthy. Looking to the future, what sort of changes can we expect to see that directly impact those of us that make our living through tax services?

This year’s PTIN requirement already eliminated tens of thousands of tax preparers from completing returns, and the examination requirement for next year will thin those numbers even more. I see this as nothing but a good thing for licensed professionals.

We have yet to see any enforcement at all of illegal telemarketing by unlicensed salespeople, but I think that is very soon to change. And yes, it is illegal for an unlicensed person to telemarket to … Continue reading

Overseas assets, FBARs, and FATCA

Last month while I was in Switzerland, I had the “opportunity” of visiting the US Embassy in Bern so that I could obtain a replacement for my stolen U.S. passport.

While I was there, I met several interesting people. One was attempting to obtain a U.S. Social Security Number so that she could file the U.S. income tax returns that the IRS was demanding that she file, since she was born in America, although technically German and Swiss. She had never been to the U.S. since she was 5 years old, and was now in her 50’s and the IRS wanted her returns.

Another lady was there to renounce her U.S. citizenship, under very similar circumstances. She had also been born on U.S. soil, technically making her a U.S. citizen. She had no family or other ties to the U.S., and not visited the U.S. since her teens, but had dutifully filed a U.S. tax return for the past dozen years. She was in her mid-30’s, had no intention of ever living in the U.S., and was very happily Swiss. She was renouncing her U.S. citizenship and turning in her U.S. passport for no other reason than to get away from the hassle of filing a U.S. tax return.

For those two individuals, it made absolutely no sense for them to being filing an American tax return.

But what if you do live in America, or intend to keep your U.S. citizenship, but spend time overseas? If you have overseas assets, especially banking and investment accounts, the IRS has you right in their crosshairs, and they are increasing the pressure.

The recently enacted Foreign Account Tax Compliance Act is the latest in a series of measures by the U.S. government to track down overseas assets and make sure that they are getting their cut. This legislation created a new form for us all to fill out, Form 8938, for certain overseas accounts. This is on top of the old Form TD F 90-22.1 Report of Foreign Bank and Financial Accounts (FBAR).

Now keep in mind, there is absolutely nothing wrong, immoral, or illegal about having overseas assets or investments. Holding overseas assets can be a perfectly valid component of your financial planning strategy.

But what the IRS doesn’t like is when you are earning returns on that money, and not paying U.S. income tax on it. You see, America is one of the few countries … Continue reading

Are you ready for IRS collections season?

June is an interesting month at the IRS. It’s the month that marks the transition every year for the IRS from tax return processing season to tax collecting season. If you filed your 2011 tax return on time and had a balance due that you didn’t pay, then you’re now entering (or re-entering) the collections process.

If you had a 2011 tax balance, then you’ve probably already received a bill, and it’s about time that a lien gets filed if you haven’t paid the balance yet. If this is your first rodeo with the IRS, then you’re in for a not-so-fun ride. To learn what to expect, I suggest you read my article on How the IRS Works Collections Cases.

If 2011 brought you an increased balance on top of an existing tax debt, then you’ve already been through the drill. With return processing season finishing up, IRS personnel that were removed from other functions are now starting to be cycled back into their normal job functions. Many of these personnel are cycled from ACS, the IRS’ centralized collections agency. Now that they are going back to their normal jobs, the collections process will pick up.

I would encourage you to learn about your rights as a taxpayer (yes, you have rights), and to look at your options as soon as possible. Do not just ignore your tax debt, it doesn’t just go away. It is best to deal with it at the ACS level, and long before the IRS starts to consider enforced collections action against you, which could include levies and wage garnishments.

Here on TaxFirms.com, we have many resources to help you resolve your tax debt situation. Be sure to look at the articles covering your specific situation, and take a look at our directory of tax firms to locate a tax professional near you that can help you with this difficult matter… Continue reading