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Tax
Debt Questions
Q1: Can I speak
with an attorney now regarding my tax problem?
Q2: Can you help me stop a wage levy or bank levy right away?
Q3: I have a tax
lien on my record, can this be removed?
Q4: I haven't
filed taxes in many years, what can I do?
Q5: I filed my
returns but I can't afford to pay my taxes, what are my
options?
Q6: Can taxes be
discharged in bankruptcy?
Q7: I filed
bankruptcy already, can I file again?
Q8: Will I go to
jail for not paying or filing my taxes?
Q9: IRS has
rejected my Offer in Compromise several times; what is wrong?
Q10: I own a
house, can I still do an offer in compromise?
Q11: Do I need to
see a tax attorney for my tax problems?
Q12: How long can
the IRS come after me for my taxes?
Q13: I have been
receiving certified mail from the IRS. What should I do?
Q14: My employer
sent me a copy of a letter they received from the IRS to levy
my wages. What does this
mean?
Q15: I think I am
being investigated by the IRS. What should I do?
Tax Audit Questions
Q1: Why am I getting audited?
Q2: I am being audited by the IRS. What should I do?
Q3: What are my rights in an audit?
Q4: What are the IRS' rights in an audit?
Q5:
What does the IRS auditor look for in an audit?
Estate Planning Questions
Q1:
Do I need a Will?
Q2:
Can I avoid probate if I have a Will?
Q3:
What assets can I transfer by using a Will?
Q4:
What is probate?
Q5:
How can I avoid Probate?
Q6:
What is a living trust?
Q7:
Can I avoid Estate Taxes if I have a living trust?
Business Formation Questions
Q1:
What is the best business form that I can set up for my
business?
Q1:
Can I speak with an attorney now regarding my tax problem?
Yes, you can call 1(888) 553-
8000. Our office hours are from 8:30 am to 7:00pm (PST);
however you can always reach our "on call"
attorney even after hours to discuss your case 7 days a
week.
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Q2:
Can you help me stop a wage levy or bank levy right away?
Yes. We'll need to contact
the IRS immediately. Often, these tax levies can be released
within a day so that you can receive your wages or access
your bank account right away.
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Q3:
I have a tax lien on my record, can this be removed?
Yes, either by submitting an
offer in compromise, negotiating structured payment of debt,
or by requesting a discharge of lien, your tax liens can be
released.
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Q4:
I haven't filed taxes in many years, what can I do?
For one reason or another,
many Americans do not file their tax returns. Some of our
clients haven't filed their returns for over ten years
before coming to us. Regardless of your reason for not
filing, it is very important to review your case with a
qualified attorney before any further action is taken. By
reviewing your case, an attorney may be able to greatly
reduce taxes and penalties which you would otherwise owe by
coordinating the timing of your tax return filing.
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Q5:
I filed my returns but I can't afford to pay my taxes, what
are my options?
There are many options for
those with tax debts who cannot afford to pay. Offer in
compromise, innocent spouse and installment payments are
some of the options available to manage your tax debt. In
some cases, attorneys can negotiate with the IRS to stop all
collection activity against you and not pursue you at all
for the taxes outstanding. In addition, by reviewing your
case, penalties, interest and even some of the taxes may be
reduced.
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Q6:
Can taxes be discharged in bankruptcy?
Most people don't know that
certain taxes can be eliminated through the bankruptcy
process. In fact, most bankruptcy attorneys or even tax
attorneys do not know that certain taxes may be eliminated
through the bankruptcy court. To properly handle tax matters
in the Bankruptcy Court, you need an experienced attorney
that has been trained and understands the complexities
involved in handling tax matters through the Bankruptcy
Court. Keep in mind that only a lawyer can give you legal
advice and discharge taxes in bankruptcy for you. Because of
the complexities, no other professionals, including CPA, or
EA are permitted to handle tax bankruptcy cases.
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Q7:
I filed bankruptcy already, can I file again?
Yes. Depending on what
chapter you filed. If you filed Chapter 7 Bankruptcy, you
can file Chapter 13 Bankruptcy after you receive your
discharge. If it has been more than 6 years since you
received your last discharge, you can file another
bankruptcy now.
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Q8:
Will I go to jail for not paying or filing my taxes?
It is a federal crime not to
file tax returns for tax periods in which taxes were due, in
most cases. In most cases, IRS will initiate criminal
actions against you only if additional factors warrant such
criminal tax prosecution. The most important step is to make
proper arrangements through an experienced tax attorney and
get into compliance with the IRS before they decide to come
after you.
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Q9:
IRS has rejected my Offer in Compromise several times; what is
wrong?
Many taxpayers get
their Offer in Compromise rejected or not even considered by
the IRS simply because they received poor representation.
There are many non-lawyers who advertise as tax resolution
companies offering "pennies on the dollar"
settlement. These non lawyers give taxpayers bad advice and
cost them a lot of money. Make sure that you hire a
competent tax lawyer. No one else can give you the proper
legal advice to fully solve your tax problems.
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Q10:
I own a house, can I still do an offer in compromise?
Yes. Ownership of any assets
does not prevent you from receiving a good settlement of
your taxes with the IRS. The government does focus on the
equity in your assets as one of the factors in determining
the acceptance of your offer. However, IRS may consider
different valuation methods in calculating value of your
particular asset.
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Q11:
Do I need to see a tax attorney for my tax problems?
Only conversations with
attorneys are absolutely protected by the rules of
confidentiality to prevent the IRS from prying or forcibly
obtaining sensitive information to be later used against the
taxpayer. Everything you say to a CPA, EA or anyone else
concerning your tax problem can be used against you if the
IRS decides that your case warrants criminal prosecution. In
fact, the IRS can investigate and force your CPA, EA or
anyone else, other than a lawyer, to testify against you for
your indictment. Always insist that you speak with a
lawyer only.
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Q12:
How long can the IRS come after me for my taxes?
There are many factors which
will determine how long the IRS can chase you to collect
taxes. Generally, IRS has 10 years from the date of tax
assessment to collect their taxes. However, there are
several tolling factors which could extend the 10 years to
collect.
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Q13:
I have been receiving certified mail from the IRS. What should
I do?
In most circumstances, IRS
sends you certified mails to levy bank accounts, levy wages
and to file tax liens against you. The green certified mail
slip on the envelope usually indicates that you must act
immediately or you may be harmed by the government's tax
collection activity.
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Q14:
My employer sent me a copy of a letter they received from the
IRS to levy my wages. What does this mean?
Unless you take immediate
action, you will lose your wages.
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Q15:
I think I am being investigated by the IRS. What should I do?
Any involvement in a criminal
investigation is extremely stressful and potentially
dangerous to any taxpayer. If you have been contacted by
criminal investigation division or believe that you may be
involved in some type of investigation by the IRS, contact a
lawyer immediately so that we can make a determination
whether you are a target of criminal investigation.
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Q1:
Why am I getting audited?
IRS uses variety of methods
to select people for audit. IRS likes to apply computer
scoring system which compares your ratio of income and
expenses to that of others in similar businesses and
locations. The focus of IRS' audits, unfortunately, are
targeted towards small business owners and self employed
people.
Certain business industries are also targeted by the IRS for
audit including realtors, contractors, doctors, textiles,
car sales, manufacturers, employment agencies and people
with investment losses. In addition, if you had prior audits
or were involved in any business dealings with people who
were under criminal investigations for tax crimes, your
chances of an audit will be much higher.
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Q2:
I am being audited by the IRS. What should I do?
You do not personally have to
attend your audit. It is advisable to hire a tax
professional to handle your case if you are concerned that
there may be some discrepancies in your tax return. In
addition, even if you decide to represent yourself, it may
be a wise move to consult an attorney for some audit defense
techniques prior to your meeting with the IRS.
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Q3:
What are my rights in an audit?
Through the Taxpayer Bill of
Rights, you are given more legal and procedural protection
from the IRS in an audit including the right to hire a
representative to meet with the IRS on your behalf, record
your meetings with the IRS, and discuss with IRS mangers if
you feel that you are being mistreated by the auditor.
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Q4:
What are the IRS' rights in an audit?
IRS' power in an audit is
broad. They can literally demand that you produce any and
all documentation to support your tax return. For example,
IRS is allowed to inspect your business location, review
your records with a fine toothed comb, contact third parties
concerning your business, contact banks, suppliers and
customers about you.
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Q5:
What does the IRS auditor look for in an audit?
IRS will usually break your
audit into at least two main components:
INCOME: IRS will review records to determine whether
your stated income is accurate by looking at bank statements
and your sales ledgers. If your business has a lot cash
transactions, IRS may further probe your stated income for
accuracy. IRS may refer your case for criminal prosecution,
if the IRS finds that there is a significant under reporting
of income.
EXPENSES:
IRS will look for back up documents and receipts which will
support your claimed expenses. IRS may try to determine
whether any of your personal expenses were claimed as
business expenses including usage of your auto,
entertainment expense, travel expense and so on.
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Q1:
Do I need a Will?
Everyone should have a Will.
It serves to specify who will receive your properties upon
your death. In addition, if you have minor children, a Will
can appoint legal guardian who will care for your children
after your death. If you do not have a Will, your property
will be distributed out according to California State law.
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Q2
Can I avoid probate if I have a Will?
No. Property left for
distribution through a Will must go through the Probate
Process. Probate is expensive and frustrating experience for
surviving members of your family. In that regard, you should
try to plan your estate so that you could avoid probate all
together.
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Q3.
What assets can I transfer by using a Will?
Although creating a Will
allows you to transfer most of your assets, certain
properties held in a living trust, life insurance proceeds,
retirement benefits, joint bank accounts, and jointly held
real estate, cannot be transferred by using a Will.
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Q4.
What is probate?
Probate is an expensive and
time consuming process which is designed to distribute your
assets to your beneficiaries with the supervision of the
State Court system. Many estates which are probated can take
over a year to process which means that your family members
may not benefit from the use of your assets during such
time.
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Q5.
How can I avoid Probate?
By hold your assets in a
Living Trust and other probate avoidance devices, you can
completely avoid Probate. Jointly held properties such as
bank accounts and real estate can be transferred without
Probate.
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Q6.
What is a living trust?
A living trust is a legal
document that allows you to transfer your assets held in the
trust without probate. Upon your death, your beneficiaries
will receive the properties designated and held in the
Living Trust without the hassle and expense of going to
court. Living Trust is extremely flexible and allows you to
transfer properties "in and out" of the trust at
your discretion. The properties in a Living Trust can be
used by you exactly in the same manner as before the
creation of the trust. For example, you can refinance your
home held in a Living Trust, you can sell your car held in a
living trust, use your brokerage and bank accounts without
any restrictions.
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Q7.
Can I avoid Estate Taxes if I have a living trust?
Currently, a lifetime
exemption of $1,500,000.00 per individual allows you to
transfer equity in assets valued up to $1,500,000.00 to your
beneficiaries upon your death free of any estate taxes. The
total amount exempted from estate taxes increases every year
and peaks out at $3,500,000.00/person in 2009. However,
Congress at any time after 2010 may reenact new Estate Tax
rules which may take away or lower any tax exemption
provisions.
Accordingly, it would be a
good idea to meet with an attorney to review your estate and
plan out a strategy which will both avoid probate and
minimize or eliminate any estate tax exposure. A carefully
planned "AB Living Trust" for married American
couples could allow significant estate tax savings.
For example, Jack and Diane
are married and live in California. They each have
$1,500,000.00 in their estate. If Jack dies tomorrow and
leaves all his assets to Diane, there is no estate tax due
because Jack can transfer up to $1.5 million tax free.
However, if Diane also dies later in 2004, she would leave
behind $3,000,000.00 in her estate. The highest estate tax
rate in 2004 will be 48% which means that approximately
$650,000.00 in estate taxes would be due. If Jack and Diane
planned their estate properly, they would have set up
"AB Living Trust". By setting up an AB Living
Trust, Diane would be allowed to use Jack's assets after he
dies and transfer up to $3,000,000.00 (for tax year 2004) in
assets to their children without paying any estate taxes. It
is always smart to plan ahead.
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Q1:
What is the best business form that I can set up for my
business?
There are many different
types of business forms that an entrepreneur may select to
operate his or her business. While each form has its
advantages and disadvantages, the new business person must
review the different types of organization and select the
one which best suits the company's needs at the outset. Most
tax attorneys would probably advise you that setting up
either a Limited Liability Company or a S-Corporation may be
the best structure to organize your new business. However,
before you select a business form, it would be wise to
consult with an attorney to describe your needs and
highlight your particular concerns before taking additional
steps.
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