Owing back taxes or a tax debt to the IRS can be stressful. The situation may have been caused by several things:
The turning of a new year is a point of significant demarcation for a lot of people in Minneapolis and Wisconsin. Tradition suggests that it's the time for us to turn over new leaves. Those in the practice of family law know it also happens to be the point at which a lot of couples who have been thinking about divorcing decide it's finally time to act.
Did you know that your passport can be revoked if you owe more than $2,500 in unpaid child support? It seems odd, if only because the state of Minnesota tracks child support debt and the Department of State issues passports. Nevertheless, the state assembles a list of noncustodial parents who are seriously behind on child support payments and forwards those names to the State Department, which in turn will refuse to issue or to renew the debtor's passport and will, given the opportunity, revoke his or her passport.
There is now an additional risk for taxpayers who fall seriously behind on their federal tax obligations. Under the Fixing America's Surface Transportation Act signed into law in December 2015, the U.S. Department of State will neither issue a passport nor renew a passport if the applicant is a seriously delinquent taxpayer. Further, the State Department must revoke the current passport of a seriously delinquent taxpayer.
What's the old joke? Oh, yes: What are the five most important words an English major will need to know after graduation? Answer: "You want fries with that?"
As we head into the new year, we trust everyone has taken a few minutes to work out a tax strategy for 2016. Planning for deductions and tax credits, looking at pre-tax contributions to employer-sponsored retirement plans and other benefits -- everything should be in place by now, and we should all be able to sit back and enjoy the long weekend.
We are just finishing up our discussion of sales and use taxes, who must pay them and when they are due. Small and mid-sized businesses, that is, businesses that may not have a full-time tax expert on hand, may be more vulnerable to the confusion that seems to be the hallmark of sales and use taxes. One reason is that the business must be fluent in the tax laws of every state it does business in, regardless of the nature of the transaction. That is a lot of ground to cover when you are trying to run a business.
A recent study conducted by McGladrey LLP (now RSM LLP) suggests that mid-sized businesses may be confused about the filing and payment requirements for sales and use taxes. While paying too much is a burden on any company's bottom line, there is also the risk of not paying what they owe and, as a result, incurring fines and penalties. The report listed 10 industries that tend to overpay, among them manufacturing, technology, financial services and pharmaceuticals.
You have just learned that you do, in fact, owe the Internal Revenue Service thousands of dollars. You received a letter pointing out a discrepancy, and you went back through the return and all of your tax records for that year. When you realized that the IRS was right, you got that tight feeling in your chest, or a headache took hold or you; you may even have blacked out.
Many taxpayers may have heard of a tax lien before, but they don't understand what the lien actually entails, such as the consequences of it being associated with your record. So what is a tax lien, and what does it mean for a taxpayer that is unfortunate enough to have it stuck to his or her record? Let's investigate further.