Finance Tax Time

The Internal Revenue Service wants you to pay taxes on time. That being said, it understands this is not always possible and has created a program for such situations.

The Internal Revenue Service is very upfront about its goal in dealing with taxpayers. While it obviously wants to collect all taxes due, it is also focused on keeping you in the system. This attitude is a relatively recent change undertaken in the 1990s. The IRS essentially determined it made better financial sense to have you in the system versus spending hundreds of man hours hunting you down. In practical terms, this means you need not have a panic attack if you do not have sufficient funds to meet your tax obligation. If you panicked this past tax deadline, there was no need.

The IRS will put you on a payment plan if you cannot pay your taxes on time. The plan calls for monthly payments like a car loan, to wit, they are an equal amount each month so you know what you are obligated to pay.

You are only eligible for a payment plan if you file a tax return. Once you file, you want to use form 9465 to request the payment plan. It costs $43 to file the application. The IRS will then get back to you on what it is willing to do. The payment plan process is not an audit. Millions of people apply each year and the IRS considers it standard operating procedure. No red flags are raised when you file the application. To the contrary, the IRS tends to view you as an honest tax payer since you are acknowledging the full amount due and trying to find a way to pay.

Importantly, the payment plan should be viewed as a means to buy time. Making the monthly payments will eventually pay off the debt, but it will take years. Interest on the amount you owe will also continue to accrue. The best strategy for using the plan is to make the monthly payments while saving up money to make a lump sum payment to satisfy the debt.

If you cannot pay the taxes you owe, do not panic. The payment plan option will keep you out of trouble with Uncle Sam.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.

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Tax cheaters. Offshore trusts. Tax-avoidance scheme operators. Individual taxpayers.

All have been targets of the IRS in what has become an aggressive war over tax compliance.

In fact, over the last few years, the IRS has established unlikely allies to combat the growing threat of tax cheaters. MasterCard is even in cahoots with the taxman.

If you’re a tax cheater and you’ve survived this long, consider yourself lucky.

A timeline of the war:

November 2003: The U.S. Senate Finance Committee holds hearings examining tax shelter abuses. Among those to testify is a man with his identity and voice disguised to protect him from retribution.

December 2003: The U.S. Justice Department files a lawsuit against Big Four accounting firm KPMG LLC, alleging that the company has obstructed the IRS’s investigation of illegal tax-avoidance schemes allegedly promoted by KPMG.

January 2004: IRS Commissioner Mark W. Everson promises more audits.

April 2004: U.S. Justice Department reports a 35 percent increase in the number of tax cheaters referred for criminal prosecution.

May 2004: IRS announces June deadline for taxpayers to come forward if they have employed the “Son of Boss” tax shelter.

June 2004: Through partnerships with 48 states and the city of New York and the District of Columbia, the IRS identifies 28,000 possible tax cheaters.

July 2004: 1,500 taxpayers come forward and admit to using “Son of Boss.”

December 2004: Chemical giant Hercules settles a case with the government in which the IRS alleged that Hercules employed an illegal tax shelter. The company agrees pay $30 million, plus a penalty of about $6 million.

February 2005: IRS identifies dozens of executives, 42 corporations, and more than $700 million in stock options related to a tax-avoidance scheme. Government offers deal: Come forward to avoid criminal prosecution.

April 2005: IRS obtains more than 100 injunctions against promoters of tax-avoidance schemes.

June 2005: U.S. Tax Court threatens to impose fines of up to $25,000 for people bringing frivolous tax-avoidance claims.

July 2005: IRS reports $4 billion in settlements from “Son of Boss.”

December 2005: IRS reports enforcement revenues are up 10 percent to a record $47.3 billion.

January 2006: Richard Hatch, who won $1 million on the original Survivor, is convicted on tax evasion charges.

February 2006: Will you be the IRS’s next target?

Darrin T. Mish is an Attorney who practice focuses on representing clients across the United States with IRS Problems.He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He can be reached at his website at http://www.getIRShelp.com

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Well, if you have any tax problems or are cheating Uncle Sam in any way, you should be.

The Internal Revenue Service, once the butt of late-night television jokes, has changed. It’s now an aggressive agency with the tenacity and bite of a pit bull.

The IRS’s enforcement numbers in 2005 were up substantially compared to the year before 20 percent more people were audited, including 221,000 taxpayers who earned more than $100,000 per year. All across the board, audits were up and enforcement was iron-fisted.

It’s not a good time to be cheating on your taxes. Just ask a few of these folks:

∑ Singer-songwriter Ronald Isley, of the Isley Brothers, was convicted on five counts of tax evasion and one count of willful failure to file a tax return. He faces up to 26 years in the Big House.

∑ Richard Hatch, the first winner of the reality television show Survivor, was charged with a 10-count indictment that alleges fraud and tax evasion. Prosecutors claim Hatch tried to avoid paying taxes on the $1,010,000 he won on the 2000 TV show. If convicted, he faces up to five years in the hoosegow.

∑ Adrian K. Karsten, a former ESPN sportscaster and winner of a 1991 Emmy Award, received 11 months of home confinement after pleading guilty to two counts of failing to file income tax returns.

∑ Lee Mroszak, a Gulf War veteran who is best known as “Crazy Cabbie” on the Howard Stern Show, received one year behind bars after pleading guilty to tax evasion.

And the list goes on and on and on.

Get the picture?

Uncle Sam means business, and for the past three years, the IRS has been getting more and more aggressive. There’s no tolerance for tax cheats and tax-avoidance schemes.

What’s more, 2006 will likely bring even more activity. Congress has already approved funding to allow the IRS to be as aggressive as it was in 2005, if not more.

If you’re one of the thousands of Americans with tax problems, you now have an ultimatum: consult with a qualified tax professional and resolve your problems once and for all or the roll the dice and take your chance.

You might not get caught this year. You might not get caught next.

But you will get caught. This year, make a wise New Year’s Resolution.

Darrin T. Mish is an Attorney who practice focuses on representing clients across the United States with IRS Problems.He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He can be reached at his website at http://www.getIRShelp.com

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