Archive for Venar Ayar

Filing For Bankruptcy And Handling IRS Income Tax Debt

Venar Ayar - Filing For Bankruptcy

Looming income tax debt can be daunting and create financial stress.  What are your best options to resolve the debt and would filing bankruptcy help?  Here is the breakdown of how tax debt is handled in the two main types of consumer bankruptcy.

Chapter 13 bankruptcy  is a debt repayment plan.  While it is still possible to discharge or eliminate a portion of debt through a Chapter 13 plan, the focus is repayment of debt with court protection from creditors.  This includes State of Michigan Income tax debt as well as IRS tax obligations.

The key to how the debt is handled is based on:

  • The age of the tax debt
  • The amount of time that has passed since the tax returns have been filed, including whether the tax returns were filed late.

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Does Your Spouse Want To Out You To The IRS?

Venar Ayar- Does Your Spouse

Whistle blowers are among the favorite heroes loved by the IRS. In fact, the IRS loves them so much that it has a program that may award a whistle blower up to 30% of the evaded tax or penalty it collects. While this should not be a problem to anyone that pays their taxes dutifully, you should be concerned if someone can blow the whistle on your illegal operations. So, who are these whistle blowers? Former employees, ex-business partners and even spouses are some of the people that may decide to out you to the IRS. These people may decide to turn on you for a couple of reasons and this blog article will help you know what to do in case it happens. But first things first.

Why do spouses turn on each other?

It is painful to think that the person you have committed your life to can blow the whistle on you. These people, however, have spent so much time with you and are likely to know some of your secrets including your tax evading tactics. Here are some reasons why spouses turn on each other.

1. Emotions

Let’s be frank here. Your spouse will not want to out you to the IRS if you are still in love with each other. This is especially true for people who are going through a divorce proceeding. There is likely to be an emotional element that makes a spouse or separated partner want to turn you in because of tax crimes. Maybe they feel hurt, betrayed or neglected over something you did to end the marriage and they may want to have their revenge. While there are other reasons for outing you, it is crucial that you do not underestimate the role of emotions in this. After all, you might end up in jail just because of this.

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Consequences Of Failing To Resolve Your Tax Debt

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Are You Unable To Resolve Your Tax Debt?

Very few things in life are as stressful as owing the IRS money, especially if you do not have the funds to pay what you owe. “So what should I do?” You are probably wondering. Well, this should not be a complicated issue if you can get the services of a proficient tax defense attorney. Since what you do at this juncture will matter a lot, it is important that you do the right thing to avoid legal trouble. Here are a couple of things to keep in mind if you are unable to resolve your debt.

The Don’ts
1. Failing To File Returns

The first and most tempting mistake that most people make when they realize they are unable to pay their taxes is not filing returns at all. While this seems like a good idea, it will lead to more penalties. The IRS automatically places a 5% penalty each month up to 25% if you do not file your taxes. Furthermore, you will also be expected to pay interest on the total bill until it is paid in full.

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When You Do Not Have Money To Pay Your Taxes: What To Do

Venar Ayar -Cannot Pay Your Taxes

Are you unable to pay your taxes before the fast approaching filing deadline? Are your tax bills amounting to an outrageous sum that you cannot be able to clear in time? Whatever the case, pending bills, more so taxes, can be quite the headache because failure to pay up can damage your credit score, cost you lots of interest and additional penalties and, in some extreme cases, lead to criminal prosecution. This can be such an exacting moment but do not get too worked up. This article will provide you with some tips to help you avoid the repercussions highlighted above. Here is what to do in such a situation:

1.      File Your Tax Returns Anyway

Even if you cannot attain the full amount to clear your due taxes, you should still file your returns by the filing deadline. Failure to file your returns while owing taxes will earn you the ‘failure to file’ penalty which is a hefty 5 percent of your due tax each month from the filing deadline to a maximum of 25 percent after which it accrues a 1 percent monthly interest. In comparison, failing to pay the due tax after filing will only earn you a small penalty of 0.5 percent of the tax due monthly until you complete the payment in full. Filing, therefore, saves you some money with the reduced penalties while you clear the balances.

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United States IRS Penalties For Failure To Make Offshore Disclosures On Revenue Or Earnings

Venar Ayar- IRS Penalties On Offshore Disclosures

According to the IRS, the US loses several billions of dollars every year as a consequence of individuals who either hide or fail to report their offshore revenue or foreign earnings. Offshore tax fraud or tax evasion is a crime if it is determined to have been committed willfully and one can face certain penalties or even jail time as imposed by the IRS. It is important to note that the IRS conducts civil audits to determine whether or not you are hiding your offshore income, revenue and filing false tax liabilities.

The IRS requires individuals with offshore accounts, investments, assets, and income to accurately report them and on time. Failure to do so results in penalties by the IRS which can be quite severe depending on the value hidden from taxation. In recent years the Internal Revenue Service alongside the United States government has prioritized the disclosure of offshore and foreign money and assets. Those that willfully choose not to comply or through ignorance do not do so become penalized in ways unique to their crimes and falsifications respectively.

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Guide For Tax Audits: What These IRS Notices Mean

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This Guide For Tax Audits was prepared by Tax Lawyer Venar Ayar. The Guide covers the many notices that the Internal Revenue Service sends to individual taxpayers regarding tax audits. This is an excellent guide for tax professionals and taxpayers alike and we thank Ayar Venar for compiling this information and reference guide for our readers.

Please be advised that all tax audits should be handled by an experienced tax professional. Please refer to the guide below:


CP11Audits   This notice states that your return has been changed because the IRS believes there was a miscalculation. This means you owe money on your taxes because of this. Double-check the numbers on your tax return to confirm that you actually did make a mistake.  If there was no mistake on the original return, you need to respond to the notice with an explanation.

CP14- Balance Due   The IRS has sent this notice because you owe money on unpaid taxes. This is the first letter sent in the collection process. It is the initial tax bill sent.  The letter gives you an opportunity to pay the tax in full to prevent any collection actions.  If you ignore the letter, the IRS will continue sending notices that get more and more threatening, and will eventually start taking collection actions.

CP16-Audits This notice was sent because we have found a miscalculation in your return that affects your refund. The IRS records show that you owe other tax debts, and we used all of part of your refund to pay them. Double-check the numbers on your tax return to confirm that you actually did make a mistake.  If there was no mistake on the original return, you need to respond to the notice with an explanation, otherwise the IRS will keep all or part of the refund you claimed.

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What Are The IRS Streamlined Filing Compliance Procedures?

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Many people may wonder what constitutes the IRS streamlined filing compliance procedures. The IRS streamlined filing compliance procedures are a system of procedures which allows US taxpayers the ability to acknowledge their failure to  report all of their foreign assets, as well as to certify that this failure to report all foreign financial assets, and the associated taxes due, was not due to a willful attempt to deceive the IRS. These procedures are designed to provide eligible taxpayers:

  • An easy, streamlined procedure for the filing of delinquent or amended tax returns.
  • Terms for filing and resolving their amended or delinquent returns, including relevant penalties.
  • Terms for resolving any tax or penalty obligations.
Eligibility For Streamlined Filing Compliance Procedures

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What Is A Doubt As To Liability Offer In Compromise?

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A doubt as to liability Offer in Compromise (OIC) can be used to settle tax debt when there is a legitimate dispute about whether you actually owe the debt. If accepted, you may use a Doubt as to Liability OIC to settle your tax debt for much less than owe, sometimes for pennies on the dollar.

The process of preparing a Doubt as to Liability OIC takes a lot of effort and knowledge of IRS practices, so consult a tax attorney for assistance.

When Doubt As To Liability Exists

Doubt as to liability generally exits when there is a dispute about the tax assessment that couldn’t be argued earlier for some reason. In other words, the time to dispute the tax liability has passed, but you have a good argument for disputing it.

Doubt as to liability may come up in the following situations:

  • New evidence is found after a tax assessment.
  • You were unaware of a tax assessment and never received notices from the IRS.
  • The IRS audited your return and adjusted your tax liability, but you didn’t receive notices from the IRS.
  • You filed an amended return, but it was never processed by the IRS.
  • Errors made by employers on wage information returns or errors made by the IRS.

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Can The IRS Garnish Your Wages If You Are Self-Employed?

Venar Ayar- Can The IRS Garnish The Self - Employed

Independent contractors and self-employed taxpayers may not have to worry about wage garnishments, but that doesn’t mean they entirely free from IRS collection actions. The IRS has many other collection powers at its disposal, so you’re better off resolving your tax problems through negotiation or settlement.

How Wage Garnishments Work

Employers handle the following tax matters for their employees:

  • They withhold income taxes based on your W-4 allowances and send this money to the IRS.
  • They withhold payroll taxes (Social Security and Medicare) and send it to the IRS.
  • They pay their own portion of your payroll taxes.

It’s fairly simple for the IRS to ask your employer to send a larger portion of your pay directly to the IRS. This is how an IRS wage garnishment works, and your employer is obligated to obey the order.

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How To Appeal The Trust Fund Recovery Penalty

Venar Ayar - Trust Fund Recovery Penal

The trust fund recovery penalty (TFRP) is equal to 100% of any unpaid trust fund taxes. You may become personally responsible for this penalty if the IRS determines that you are a responsible person at the business who willfully failed to send the payroll tax money to the IRS.

The TFRP is a severe penalty, and you should consult a tax attorney if you are being investigated for a possible TFRP assessment.

Negotiating The TFRP

First, you have the option to request mediation before the IRS assess the TFRP. This involves a neutral mediator who will attempt to reach a settlement between you and the IRS.

The good thing about mediation is that it isn’t binding on either party. If you don’t like the deal, the IRS can move forward with the penalty assessment and you can use your formal appeal rights.

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Being Audited By The IRS But Don’t Have Any Receipts?

Venar Ayar - Records For A Tax Audit
IRS Record Keeping Guidelines

The Internal Revenue Service generally advises taxpayers to retain copies of all tax returns and any relevant supporting documentation for at least the previous three tax years. The IRS also provides an extensive list of the types of records they may request if you are audited. These include:

  • Receipts
  • Bills
  • Checks
  • Legal paperwork and documentation
  • Loan agreements
  • Tickets
  • Medical or Dental Records
  • Employment documents

The IRS accepts electronic records in some instances, namely if the electronic records were produced by tax software. If you have any questions about whether your electronic documents and files are acceptable to the IRS, you should contact an experienced tax attorney right away.

Can Lack Of Receipts Derail Your Audit?

While it is imperative that you maintain all your records relating to your tax returns, especially for the last three tax years, if, for some reason, you do not have all the necessary documentation before an audit, you aren’t out of luck completely.

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