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Tax FAQ
 
IRS - MOST FREQUENTLY ASKED QUESTIONS
1.    Why my IRS bill keeps getting larger?

2.   Why my problem can�t seem to be resolved?

3.   How are you different from all other professionals?

4.   What�s the difference between Non-Filing vs. Non-Paying?

5.  What are the IRS Collection Procedures?

6.  What is a Levy and how can I get it lifted?

7.  What is a Lien and how can I get it released?

8.  What is a Seizure and how can I get it released?

9.  What are my options?

10.  What are some of the Temporary solutions?

11.  What are some of the Partial solutions?

12.  What are some of the Permanent solutions?

13.  What is an Installment Agreement?

14.  What is an Uncollectible Status?

15.  What is an Innocent Spouse Protection?

16.  What is an Abatement?

17.  What is an Audit Reconsideration?

18.  What is an Amended Tax Return?

19.  What are the chances of winning a Litigation?

20.  Can Bankruptcy help me?

21.  What is an Offer In Compromise?

22.  What�s the Minimum that I can offer?

23.  Can Homestead law protect me?

24.  Can the IRS take my Retirement Funds?

25.  What�s the difference between Audit Ready vs. Audit Avoidance?

26.  What is a Summon and what must I do?

27.  What is a Fraud and how can I defend myself?

28.  What is a Criminal Investigation and what can I do?

29.  Does the IRS need a Warrant to come into my house?

30.  What are your Fees?

31.  Do you offer any Guarantees?



ANSWERS TO FREQUENTLY ASKED QUESTIONS
1. Q: 
I�ve been making payments for years, so why my IRS bill keeps getting larger?
  A: The IRS penalties and interests are approximately 20% a year. If you�re on an installment plan, chances are that you�re only paying for penalties and interests, or less. Installment plan is a quick fix to relieve immediate pressures from the IRS. It doesn�t dissolve it.
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2. Q: 
I�ve been hiring professionals (attorneys, CPA�s, and former IRS agents), so why my problem can�t seem to be resolved?
 A: IIn order to resolve your IRS problems, you MUST have 3 key elements: You must have all the documents to prove your points, your representative must know the tax laws applicable to you, and most important, he/she must be willing and able to fight for your rights. If any one of these 3 key elements is missing, your problems will NOT be resolved . . . unless you�re lucky. We don�t just fill out forms. We solve problems!
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3. Q: 
How are you different from my attorneys, CPA�s, former IRS agents, or Accountant?
 A: Most of these professionals have very little experience with IRS audits or IRS collections. Attorneys are best when you want to litigate in court to dispute the letters of the law. CPA�s are best when you want to dispute financial calculations. IRS agents are �specialists.� They�re best when you challenge the IRS in his field of training and even better when you challenge his former co-workers who are willing to give him a break. If you�re challenging Collections issues and you hire an agent who was an Auditor, it won�t work very well. Similarly, if you�re challenging an audit and you hired a Personal Injury Attorney, it won�t work either. We defend taxpayers everyday. We get results!
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4. Q: 
What is the difference between Non-Filing vs. Non-Paying?
 A: Jail time. You can be jailed for not filing your tax returns. That�s how they got the infamous criminal Al Capone. If you cannot pay, they cannot put you in jail. However, if you flat out refuse to pay, you can be jailed, too.
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5. Q: 
What are the IRS Collection Procedures?
 A: There are several steps that the IRS must adhere to:
First Notice
3 more monthly payment requests
10-day Notice of Intent to Lien
30-day Notice of Intent to Levy
Enforcement (seizure/lien/levy).
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6. Q: 
What is a Levy and how can I get it lifted?
 A: It�s a Short-Term Enforcement. Banks and employers have 21 days to turn over the funds. Accounts Receivables are paid to the IRS in original terms. Levy on paychecks and Accounts Receivables remain until the IRS lifts it. Levy on bank accounts, on the other hand, is effective only on the day that it�s enforced. However, the IRS can make as many levies as they want, usually on the days that they see a healthy bank balance. In order to lift the levies, you must implement one or more of the solutions listed below. We typically can get a levy released within 1 to 10 days.
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7. Q: 
What is a Lien and how can I get it released?
 A: It�s a Long-Term Enforcement. It�s much worse than bankruptcy. The IRS files a record at the courthouse, announcing that you owe them money. By doing so, they have signed a �death warrant� on your credits and no financing institution would want to have anything to do with you. You cannot buy or sell anything important (real estates, cars, furniture, etc.). In order to release the liens, you must implement one or more of the solutions listed below. In some rare occasions, you can ask the IRS to �temporarily release� and/or �subordinate� the lien. We succeeded helping some taxpayers sell their old house and move into the new house when all other professionals (attorneys, Realtors, IRS officers, and CPAs) were telling us that it seemed �impossible� and �don�t even try.�
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8. Q: 
What is a Seizure and how can I stop it?
 A: It�s perhaps the most powerful weapon in the IRS arsenal. It is similar to a lender�s foreclosure, only much more powerful. If a collection officer feels that he has exhausted all means available to him and still cannot collect money from you, then he can request for an order from the judge to come and seize all your assets. At this point, most professionals would give up and there usually are very little that you can do except that you or your friends have the opportunity to come repurchase your properties at the IRS auctions. In the past, we have succeeded in stopping the seizure by working closely with the IRS and negotiated for a �second chance� but we don�t recommend that you wait to this point before coming to us for help.
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9. Q: 
I owe the IRS more money than I can afford to pay. What are my options?
 A: For every problem, there are multiple solutions. We have never found a case where there are NO solutions. For 10 years, we have succeeded in resolving IRS problems for every single person that came to us and honestly wanted help, including those claiming to be �desperate,� �at my wit�s end,� �beyond repair,� and �I wish to kill myself.� Please see the Temporary solutions, the Partial solutions, and the Permanent solutions below.
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10. Q: 
What are some of the Temporary solutions?
 A: There are quick fixes that allows you to �postpone� collection, but usually doesn�t dissolve the debt. Some people find that 20 years later, they owe the IRS more than they did at the beginning. These include Installment Agreement and Uncollectible Status.
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11. Q: 
What are some of the Partial solutions?
 A: These are ways to cut down on the amount that you owe. I a few instances, they can eliminate the debt, but usually they can only reduce the debt. These include Innocent Spouse, Abatement, Audit Reconsideration, and Amending the Returns.
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12. Q: 
What are some of the Permanent solutions?
 A: These solutions actually help you dissolve the debt. However, they�re the hardest ones to implement. You and/or your representative must understand the tax laws and especially the National and Local Standards very well. If all you do is �fill in the blanks� like most CPA�s, former IRS agents, and/or Attorneys do, then chances are that you�re hurting more than helping yourself. These include Litigation, bankruptcy, and Offer In Compromise.
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13. Q: 
What is an Installment Agreement?
 A: There 3 versions of Installment Agreement (aka Payment Plan):

1) The Levy: Here the IRS wants to get your attention and what�s a better way than taking away all of your bank account, your retirement funds and virtually all of your paycheck? Usually, what they leave for you to live with is approximately $200/week or less. For many people, it�s not enough to even pay rent.
2) The 60-month Rule: After the levy, you call the IRS and beg for mercy. They take the amount that you owe, divide it by 60, giving you a monthly payment that seems very affordable, and you�re only so happy to accept it. However, here�s the catch: The annual penalties and interests is approximately 20% so what you pay each month is only enough to pay for penalties and interests. Therefore, like most credit card debts, you pay and pay, but the IRS debt never goes away.
3) Financial Standards: The correct way to calculate your payment plan is to take your monthly income minus the National and Local Financial Standards. From our experience, we find that if prepared properly, you�d almost always find that you�ll pay in substantially less than the 60-month Rule mentioned above.

Note: If you�re making partial payments for payroll taxes, be sure to designate it to the trust portion (employee withholding) to relieve officer�s personal liability.
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14. Q: 
What is an Uncollectible Status?
 A: When you have little or no assets and no income beyond absolute Necessary Living Expenses, you can ask for Section 53 Hardship Rule. If approved, you don�t have to pay the IRS a penny as long as they still classify your as Uncollectible (They check on you every few years to see if your situation has changed and if you can pay them yet. For example, winning the lottery will automatically take you out of the Uncollectible Status). However, your tax bill is growing at the rate of 20% a year. Surprisingly, we found that many of the people who are making monthly payments actually qualify for Uncollectible.
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15. Q: 
What is an Innocent Spouse Protection?
 A: IRS section 6013(e) protects spouses who do not know what her spouse has been doing. If granted, the IRS cannot claim the innocent spouse�s assets. While this sounds wonderful, you most likely will have to appeal in court and even then the chances of getting approved for this protection is virtually none.
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16. Q: 
What is an Abatement?
 A: It allows you to pay liability, but not penalties or interests. Acceptable excuses are: Illness, records destroyed, family problems/divorce, improper advice from a tax professional and/or the IRS. Be prepared to show proofs.
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17. Q: 
What is an Audit Reconsideration?
 A: For some IRS auditors, their standard procedure is to �disallow everything.� It�s up to you to prove every single deduction. If you don�t know the tax law, chances are that you will end up with an unfairly large tax bill. The best solution is perhaps to find a tax professional to ask for an Audit Reconsideration to �challenge� the audit. We have reduced as much as $185,000 per client.
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18. Q: 
What is an Amended Tax Return?
 A: If you believe that your tax returns have been erroneous (you did not claim all income and/or deductions), you are entitled to correcting the returns. There are 2 time limits: You must amend the returns 3 years from the due date or 2 years from the time that it was paid. Note that if it�s not paid, statute of limitations is never expired and either you or the IRS can still make adjustments to it. We�ve seen cases where the IRS was demanding the taxpayer money ($77,000) and after we amended the returns, the IRS gave him a REFUNDED ($55,000)! Obviously, this is a very powerful technique. However, when the amended return yields large differences such as this case, the IRS will most likely require an audit before approving the refund. Another important point is that frivolous amended return can result in fraud penalties and imprisonment.
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19. Q: 
What are the chances of winning a Litigation vs. the IRS in court?
 A: Fortunately, we have been able to successfully defend many taxpayers (including other attorneys and tax professionals) in and out of court. However, statistically, the chances of winning the IRS in court is slim to none so avoid it if possible. When all else fail, you can take the IRS to court, too (the IRS doesn�t have monopoly on this game). However, you must know the applicable tax laws and know your rights. Be prepared for a long and difficult fight. More important, stand your ground and be sure to do your homework. Note that not all attorneys are licensed to practice in the Tax Courts. Our attorneys are licensed to practice in Tax Court as well as local, state, federal, and bankruptcy courts.
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20. Q: 
Can Bankruptcy help me with my tax problems?
 A: We can file bankruptcy for you, but only as an absolute last resort. Be careful with this because some taxes cannot be discharged via bankruptcy (or because your attorney wasn�t thorough). Therefore, you may spend time, money, and ruin your credits but still find the IRS right behind you, enforcing collection. Our attorney is specialized in bankruptcy and can walk you through the bankruptcy maze in discharging IRS taxes. We have helped clients successfully discharged millions of dollars in debts every year.
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21. Q: 
What is an Offer In Compromise?
 A: This is the most publicized and most misunderstood solution (even to the IRS officers). While it�s true that you can make an offer of �pennies on the dollar,� it doesn�t mean that the IRS would accept it. Most likely, your offer will be refused if you or your representatives are not experienced in Offer In Compromise. In fact, their help can lend more harms and good. Some professionals live by submitting and re-submitting frivolous Offer In Compromise. This costs you time and money while making the IRS angry at you for wasting their time. We never submit an offer unless we know that it has a very good chance of approval and we�ll keep resubmitting until it�s approved, at no cost to you. Virtually all of our offers were accepted, saving as much as $439,000 per client!
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22. Q: 
What�s the minimum that I can offer?
 A: The lowest minimum offers we submitted that were approved was $100.
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23. Q: 
Can Homestead law protect me?
 A: Homestead is state law. Income tax is a federal law so the state cannot protect you. If you want to keep your house, we have more effective programs. Morever, if the house you live in is deemed �excessive,� they can ask you to move to a smaller, more affordable house so that you can pay your IRS debts. If you refuse, they can help you move.
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24. Q: 
Can the IRS take my Retirement Funds?
 A: Yes. Usually, the IRS believes that you should not build a retirement nest with �their money.� Sometimes, we can help our clients keep this money, but it�s not easy.
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25. Q: 
What�s the difference between Audit Ready vs. Audit Avoidance?
 A: Many tax preparers tell you not to claim some of the tax deductions that you are legally entitled to. This is to help you avoid an audit, or so they said. We find that tax professionals who prepare tax returns by �filling in the blanks� don�t have clear understanding of the tax law. Therefore, it is safer (for them?) to let you pay more with the hope that you won�t be audited. Unfortunately, since these �form-fillers� don�t fully understand the tax law, they create other, much larger �red-flags� that literally begs the IRS to audit you. We recommend that you be Audit Ready where you claim all that you�re entitled to, but have full and proper documentation for everything that you claim. In fact, we have on several occasions �REQUESTED� for an IRS audit in order to expedite a refund for our clients because our clients were Ready for An Audit!
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26. Q: 
What is a Summon and what must I do?
 A: This is an order for you to produce documents. You must comply to the best of your ability. If you feel that compliance could risk self-incrimination, call your attorney. If you refuse to comply, they can put you in jail.
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27. Q: 
What is a Fraud and how can I defend myself?
 A: The IRS listed the following transactions as fraud: Deliberately under-reporting or omitting income, overstating the deductions, making false entries in books and records, claiming false deductions, and hiding assets or income. The best defense you can have is to take the Fifth Amendment and say nothing no matter how innocent you think that you are. Get professional help. Even if you�re an experienced lawyer, get somebody else to represent you.
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28.Q: 
What is a Criminal Investigation and what can I do?
 A: As a Criminal Investigation Division (CID) Agent so eloquently put it: �When we suspect that you may be involved in a fraudulent transaction, we will start the investigation. At the end of the investigation, somebody is going to jail. When the CID Agent contacts you, RUN, don�t walk, to find the most qualified tax professional that you can afford. Make sure that he�s knowledgeable in tax law, experienced in handling criminal investigations, and can represent you in the Tax Court. We were able to close all CID investigation without anybody going to jail, but that wasn�t easy.
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29.Q: 
Does the IRS need a Warrant to come into my house?
 A: No The IRS agents usually cannot and do not want to come into your house. The ones that want to come in are usually CID agents who can write their own warrant. Do not attempt to stop them. Instead, call us immediately.
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30.Q: 
What are your Fees?
 A: Our fees vary from case to case, but we can assure you that they�re reasonable. We�ll tell you the fees up front. No surprises. Payment plans are available. You will find that the benefits will far outweighs our costs. One thing that our clients love the most is that we take over ALL contacts with the IRS so that you can have your peace of mind, not worrying everyday when the IRS will come to your door.
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31.Q: 
Do you offer any Guarantees?
 A: Beware of anybody who guarantees that you will get the results that you want. We work for you, NOT for the IRS. As such, how can we guarantee that they will do what we want, even if it�s the right thing to do? However, we can guarantee that we will do everything that any professional could and should have done to protect your interests. For 15 years, we have succeeded in resolving IRS problems for every single person that came to us and honestly wanted help. We promise to tell you the truth, even if that�s not what you want to hear. Also, we will NOT sell you services that you don�t need, even if you don�t mind paying for it.
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Financial Evolutions, LLC
Arena Tower II
7324 Southwest Freeway, Suite 585-B
Houston, TX 77074

(713) 759-1700

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