Tag Archives: Federal tax

IRS Hiring Hundreds of New Agents

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The IRS is hiring hundreds of Internal Revenue Agents! What does this mean for taxpayers? Does this signal the beginning of a new era of heavy enforcement activity? Considering the fact that April tax revenue collected by the US government fell by more than 30%. It only stands to reason that the government will start some more heavy handed collection and enforcement and these new agents will be taking the field to do just that. If you have been putting off taking care of a tax issue, you should consider getting it settled as soon as possible.

The IRS has begun a major hiring effort to fill hundreds of critical jobs nationwide. Most of these Continue reading →

Relief on Cancellation of Business Debt Taxation

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Have you renegotiated a business note or loan? Paid the note holder a lower amount than the principal balance currently owing in satisfaction of the note? This could be a great tip to postpone the tax impact. Yes, I said tax impact. Under normal circumstances the amount of loan that was “extinguished” without being paid should be “Cancellation of Debt” income to you. This applies whether you are operating as a corporation or as an individual. Well the 2009 Recovery Act has come to your rescue. Under the new law if you reacquire business debt you can elect to postpone the payment of tax. This is where it gets good. You get to spread the effects over five years! Not good enough? How about this? Continue reading →

Canceled Debt – A Tax Nightmare?

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In today’s troubled economy it is more and more common for common folks to negotiate mortgages and end up with better terms. In some extreme situations the bank may actually cancel some, or rarely, all of the principal balance of an outstanding loan. If you find yourself int his position be sure you know what the tax consequences are!

The general rule is; cancellation of debt income is taxable as ordinary income. Internal Revenue Code section 61 provides that gross income means all income regardless of the source from which it is derived. Section 61(a)(12) specifically includes “income from discharge of indebtedness” as an item of gross income.

Cancellation of debt (COD) income can arise in a number of areas, such as: Continue reading →

What If You Can’t Pay On Time?

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With the April 15th filing deadline quickly approaching some people are undoubtedly reaching a state of panic.  You have finished your return and there is balance due to the IRS.  Worse, you do not have the money.  Now what?!  Do you hold onto the return and not file?  No.  This is the worst thing you could do.  By doing this you not only incur interest and penalty for not paying on time, but also get some late filing penalties added to the mix.  No, go ahead and file.  Include payment for as much as you can and include a note explaing how you plan to pay the balance.  There are also alternative payment options to consider.  Based on your circumstances, you may be granted a short additional time to pay Continue reading →