Wisconsin’s Film Tax Credits – What is Not Eligible.

If a production company plans to apply for accreditation of a production from the Wisconsin Department of Commerce, it should first consider whether the credits are available for the project. The Wisconsin film tax credits are available to accredited productions. Certain types of productions are specifically excluded from being eligible for the credits. Under the Wisconsin Statutes, accredited productions do not include:

(1) news, current events, or public programming or a program that includes weather or market reports (ex. Fox News, CNN, Weather Channel, etc.)

(2) talk shows (ex. Oprah, Tyra Banks)

(3) questionnaire or contest shows (ex. Deal or No Deal, American Gladiators)

(4) sports events or activities (ex. Packers vs. Giants, The Highland Games)

(5) gala presentations or awards shows (ex. Golden Globes, Emmys, Oscars)

(6) productions that solicits funds (ex. PBS fundraisers)

(7) “a production for which the production company is required under 18 USC 2257 to maintain records with respect to a performer portrayed in a single media or multimedia program,” the statutory reference applies to the adult film industry. (Presumably the Wisconsin legislature did not want to be viewed as making tax benefits available to adult filmmakers.)

(8) a production produced primarily for industrial, corporate or institutional purposes. (ex. Training videos)

Wisconsin’s Film Tax Credits – More About the Credits.

In continuation of last week's dicussion on the Wisconsin Film Tax Credits, I address some additional facts about claiming the credits.

To claim the Film Production Services Credit, the Film Production Expenditures Credit or the Sales and Use Tax Credit, the Film Production Company must be creating an accredited production. An accredited production means a film, video, electronic game, broadcast advertisement, or television production as approved by the Department of Commerce. Additionally, to claim the credits the aggregate salary and wages associated with the production must equal $100,000 for a production 30 minutes or longer and $50,000 if the production is shorter than 30 minutes. These salary and wage expenses must be incurred within 12 months of the date on which principal filming began.

To claim the credits, a film production company must file an application for accreditation with the Wisconsin Department of Commerce and must file a copy of the approved application with its tax return.

Wisconsin’s Film Tax Credits - Four Types of Credits

The January 23 post gave an introduction to the Wisconsin film tax credits that are now available to productions accredited by the Wisconsin Department of Commerce. In more detail, these credits are:

1) Film Production Services Credit. The Film Production Services Credit is equal to 25% of salary or wages paid for services rendered in Wisconsin to produce an accredited production and paid to Wisconsin employees. The credit for salary or wages paid must not exceed an amount equal to the first $25,000 of salary or wages paid to each employee, not including the salary or wages paid to the two highest paid employees.

2) Film Production Expenditures Credit. The Film Production Expenditures Credit is equal to 25% of qualifying production expenditures incurred in the state. Qualifying expenditures include: set construction, wardrobe and makeup, photography, sound recording and mixing, lighting, editing and processing, special effects, rental or lease of facilities and equipment, food, lodging and more. Expenditures not eligible include those for distribution and marketing. Music by a resident of the state, or published or distributed by an entity headquartered in the state, air travel purchased by a travel agency headquartered in the state, and insurance purchased from a company headquartered in the state are also eligible. Expenditures not eligible include those for distribution and marketing.

3) Sales and Use Tax Credit. The Sales and Use Tax Credit is equal to the amount of sales and use taxes paid in the taxable year on the purchase of tangible personal property and taxable services that are used directly in producing an accredited production in Wisconsin, including all stages from the final script stage to the distribution of the finished production.

4) Film Production Company Investment Credit. The Film Production Company Investment Credit allows a credit for the first three taxable years that the claimant is doing business in Wisconsin as a film production company. The credit is equal to 15% of the purchase price of depreciable, tangible personal property and the amount expended to acquire, construct, rehabilitate, remodel or repair real property. For purposes of this credit, a film production company means an entity that creates films, videos, electronic games, broadcast advertisement, or television productions (but not those explicitly excluded from an accredited production).

The Film Production Expenditures Credit is a refundable credit that may be taken even if the amount of the credit exceeds the tax due. That is, you can get a refund in connection with this credit even if you haven’t actually paid any tax. The other credits are non refundable, however, they may be carried over to offset tax due for a period of up to 15 years.

Friday's Tax Quote.

"The income tax created more criminals than any other single act of government."

- Barry M. Goldwater

Wisconsin’s Film Tax Credits – It is Time to Start.

Effective January 1, 2008 the State of Wisconsin’s film tax credits went into effect. These credits were created to encourage the film, television and video game industries to produce their projects in Wisconsin. A few weeks later, on January 22, the Milwaukee Journal Sentinel reported that several productions were planning to take advantage of Wisconsin’s new film tax credits. The newspaper reported that the film “Blue World” will be filmed in Milwaukee and “The Violinist” will be filmed in Green Bay. Additionally, producers of the film “Public Enemies” (expected to star Johnny Depp) have applied to the Wisconsin Department of Commerce to qualify for the tax credits. Film production companies, those that will provide the industry with essential infrastructure, are also getting into the act.

The tax credits are anticipated to encourage these film, television, video, video game and broadcast advertisement producers to spend large amounts of their production budgets in Wisconsin. In return, the state will give them some of their money back. Hopefully this will pump a substantial amount of money into the Wisconsin economy, grow Wisconsin’s reputation as a film friendly state and reward those who produce qualifying productions.

The Wisconsin Statutes provide four types of tax credits:
1) The Film Production Services Credit.
2) The Film Production Expenditures Credit.
3) The Sales and Use Tax Credit.
4) The Film Production Company Investment Credit.

Certain productions are specifically excluded from qualification, such as, news or sports programs and talk shows but for the large number of productions that do qualify, the credits may be claimed if certain statutory requirements are satisfied. When a production meets the requirements, the tax credits may be claimed by individuals, insurance companies or corporations (partnerships, some LLCs and S corporations cannot claim the credits directly, however, the credits may be passed through to the owners in proportion to their ownership interests).

The next several posts to this blog will address some of the technical aspects of these tax credits and some of the procedures for obtaining the credits.

IRS Audit Statistics

Last week the IRS released statistics regarding the 2007 fiscal year. Significant items in those statistics relate to who the IRS was auditing, how often the IRS filed liens, used levies and seized taxpayers’ property.

In the 2007 fiscal year:
1) The IRS collected $59.2 billion through audits, collection and document matching.
2) Audits of tax returns for taxpayers with incomes of $1 million or greater equaled 31,382.
3) Audits of tax returns for taxpayers with incomes of $200,000 or greater equaled 113,105.
4) Audits of tax returns for taxpayers with incomes of $100,000 or greater equaled 293,188.
5) Audits of tax returns for taxpayers with incomes of less than $100,000 equaled 1,091,375.
6) The IRS levied on the assets of 3,757,190 taxpayers
7) The IRS filed 683,659 liens
8) The IRS seized the assets of 676 taxpayers.
9) The IRS initiated 4,211 criminal investigations and 2,323 people were charged/indicted. The government had a 90.20% conviction rate.

The straight numbers don’t show that the number of audits of high income taxpayers has increased from prior years. In fact the IRS has deliberately pursued higher income taxpayers. However, the number of audits of taxpayers with less than $100,000 in income remains very high. Additionally, the number of liens and levies are higher than they have been in the last ten years. Seizures of taxpayer property are at the highest level they have been since 1998.

This means that the IRS is becoming more serious and effective in collecting taxes through its audit and enforcement procedures. The best ways to guard against additional tax, penalties and interest flowing from an audit is to have legal support for reporting positions at the time the tax return is filed and to retain adequate records to substantiate claimed deductions. If a taxpayer fails to do so, a skilled representative can help to reconstruct the legal and factual basis underlying a tax return, yet, this is not cost free. The best way to solve a tax problem is to avoid having the problem in the first place.

Limited Liability Companies.

In most states, a limited liability company (LLC) is easy to form. This simplicity, combined with the limited liability that the LLC affords to its owners, makes it an attractive choice of entity. To boot, the tax treatment of an LLC can take almost any form that the owner (or owners) chooses. A single owner LLC will be disregarded for tax purposes unless the owner elects for the LLC to be taxed as a corporation. A multi-member LLC will be taxed as a partnership unless corporate taxation is elected. This flexibility has caused people to flock to the LLC as a preferred form of ownership.

The problem with the ease of using an LLC is that people often overlook some of the important non-tax aspects of forming an LLC. These issues are particularly significant when dealing with multi-member LLCs. To find out more about these practical issues and how to avoid them, listen to the podcast on LLC Organizational Issues recorded by Attorney Steven M. Szymanski that can be found at http://www.wbb-law.com/podcast/#13.

Friday’s Tax Quote.

"Another difference between death and taxes is that death is frequently painless."

-Anonymous

Avoiding Tax Penalties and Getting Back into the System through Voluntary Disclosure.

As people across the United States start to receive their Forms W-2, 1099 and 1098, they gear up for the income tax filing season. As tax season falls upon us, the federal and state revenue agencies look to encourage taxpayers to file their required tax returns and pay the tax. To do so, the tax authorities will take steps to, more or less, scare taxpayers into filing returns and paying tax.

In the coming months we will hear more on the news and read more in the newspapers about people and businesses that are being pursued by the taxing authorities. The stories will be about those that failed to file tax returns or have understated their taxable income. The common thread of these stories will be that the taxpayers have now been caught and must pay overwhelming taxes, interest and penalties. In a worst case scenario these taxpayers may face criminal penalties.

For those that have failed to file tax returns in accordance with the tax laws (known as “non-filers”) or those that have understated their income, there may be an opportunity to avoid any tax penalties if they come clean before getting caught. Consider it a reward for a mea culpa. Most states, if not all, will allow a taxpayer to fix the problems or to get back into the tax system without having to pay costly tax penalties. These procedures are known as Voluntary Disclosure Programs.

I have recorded a podcast discussing the aspects of Wisconsin’s Voluntary Disclosure Program (as applicable to non-filers). The program is similar to that found in many states as well as that of the Multistate Tax Commission. The podcast includes a more in-depth discussion of typical Voluntary Disclosure requirements and can be found here: http://www.wbb-law.com/podcast/#720

Offers In Compromise Based on Hardship or Public Policy.

The IRS can resolve a tax liability for less than the total amount of tax, interest and penalty owed through the Offer in Compromise process. One basis for making a deal is the theory of Effective Tax Administration or “ETA Offers.” These ETA Offers may be used to deal away a tax liability if the taxpayer is facing “economic hardship” or there are reasons of public policy that justify a reduction in the liability.

It is important to note that the ETA Offer is not used when a taxpayer cannot afford to pay the liability (a situation that would call for a Doubt as to Collectability offer). Rather, the ETA Offer is used when, in spite of the ability of the person to pay the tax debt in full, special circumstances exist that warrant a deal.

There are two types of ETA Offers. First, an ETA Offer may be accepted if collection of the liability in full would cause the taxpayer economic hardship (within the meaning of the Treasury Regulations). Second, an ETA Offer can be accepted when public policy or equity considerations identified by the taxpayer provide a sufficient basis for compromising the liability (a non-hardship ETA Offer).

For an offer to be accepted based on economic hardship, the IRS will generally consider the offer acceptable when, even though the tax could be collected in full, the amount offered reflects the amount the IRS can collect without causing the taxpayer economic hardship. The IRS will base its determination to accept a particular amount on the taxpayer’s facts and circumstances by analyzing the taxpayer’s financial information and the hardship that would be created if certain assets, or a portion of certain assets, were used to pay the liability.

An ETA Offer based on non-hardship grounds (i.e. based on compelling public policy or equity considerations) will generally be acceptable if it reflects what is fair and equitable under the particular facts and circumstances of the case. A compromise is justified under this standard where, from the IRS’ perspective, collection of the full liability would not undermine public confidence that the tax laws are being administered in a fair and equitable manner and would not adversely affect the overall tax system.

While an Offer in Compromise can be accepted on the basis of Effective Tax Administration, other than the broad standards identified above, there has been little guidance from the IRS as to when it considers acceptance of such an offer appropriate. This is reflected in the statistics. Less than one-half of one percent of the Offers in Compromise accepted in 2007 were ETA Offers. Acceptance of ETA Offers is rare.

The Taxpayer Advocate Service has written that one of the reasons for the low acceptance rate of ETA Offers is that IRS employees lack sufficient training when it comes to such compromises. As such, the Taxpayer Advocate has speculated that the IRS may be seeking forced collection action against taxpayers before considering whether an ETA Offer is appropriate. A change in this area is certainly appropriate.

The issues discussed above mean that ETA Offers are likely to remain unused to any substantial degree until the guidance and training issues are addressed. Once addressed, the ETA Offer may still be uncommon, however, even if the number of accepted ETA Offers was increased tenfold, this type of compromise would still be on the low end of the Offer in Compromise spectrum.

Will Wesley Snipes Avoid Going To Jail for Tax Evasion?

Obviously, this will be for a jury to decide. However, the argument that Wesley Snipes seems to be making "that the law doesn't require U.S. citizens to pay tax and that the government is collecting taxes illegally" usually doesn't hold up in court.

Today the New York Times reported that Wesley Snipes is heading to court. The article "Wesley Snipes to Go on Trial in Tax Case" (by David Cay Johnston, January 14, 2008) identifies a number of criminal tax cases in which defendants have been acquitted of criminal tax charges based on the argument that they really didn't believe that they were required to pay taxes. This appears to be an argument that the defendants lacked the requisite "intent" needed to be guilty of the crime of tax evasion. Two points should be made here: 1) a defendent is lucky if this argument works and 2) these people, even if they manage to avoid the criminal conviction, usually do not avoid the tax liability.

In the article, David Johnston points out that the IRS has generally recovered the civil tax liability from all of the defendants that have managed to avoid the criminal conviction. What should be learned from this is that the law does require the payment of taxes. Those who intentionally choose not to pay taxes are committing a crime. Those who unintentionally fail to pay taxes will still be liable for the tax debt. Anybody that tells you differently, is selling something.

Ultimately, taxes must be paid according to the provisions of the Internal Revenue Code. However, it is not necessary to pay more than what is required by the law and, if the law permits, one can structure his or her affairs to reduce a tax liability as much as possible. As Judge Learned Hand once wrote:

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."

Personally, I'll be surprised if Mr. Snipes is acquitted. Even if he is acquitted, I'm confident that he won't avoid the civil tax liability.

Taxpayer Advocate Says: The Offer in Compromise Process Needs to be Fixed.

On January 9th, the Taxpayer Advocate released her report to congress identifying the most serious problems that are being encountered by taxpayers. The report is well over 700 pages and addresses many issues. One of the problems discussed in the report is that the Offer in Compromise program is not being used to any significant extent.

The Offer in Compromise is a process by which a person or business that is facing a tax liability can resolve that debt for less than the amount due. A compromise can be reached if the taxpayer doesn’t have the ability to pay the entire amount (Doubt as to Collectability), doesn’t actually owe the tax (Doubt as to Liability) or if other special circumstances exist (Effective Tax Administration).

The number of Offers in Compromises that have been accepted by the IRS has dropped by 70% since 2001. The culprit is many of the changes that have been implemented concerning the program. The goal of the changes has been noble: to reduce the amount of frivolous offers that are being submitted. Unfortunately, the result of the changes is not consistent with the goal and the number of viable Offers in Compromise that are submitted has decreased.

Some of the recent rules have been to require the payment of a $150 fee and a 20% down payment when an Offer in Compromise filed. In lieu of the 20% down payment, a taxpayer may choose to make installment payments while the offer is pending. Each of these payments, once made, are non refundable regardless of whether the offer is rejected or simply returned without being processed due to a technical requirement that was not satisfied.

Often, hiring a professional to help with an Offer in Compromise can avoid the return of an offer. However, because the rules are plentiful and some of them complicated, those that cannot afford representation are hit with a double whammy. That is, not only is their Offer in Compromise returned without consideration, the IRS keeps the down payments made when it was filed. This means that those that are financially destitute do not have the resources to try again after the technical problem is fixed. Even for those people that make relatively large offers to compromise tax debts that are even larger, the down payment requirements can preclude the ability to refile a returned offer.

Possibly the best recommendation concerning Offers in Compromise made in the Taxpayer Advocate's report is that people should be given credit for down payments made on other recent offers. That is, the report suggests that if an offer is returned, rejected or withdrawn within the preceding 24 months, the taxpayer submitting the offer should be given credit for any payments made in connection with the earlier offer.

While this solution would still require that down payments be made, the credit for recent payments made in connection with a previous compromise attempt would encourage a resubmission of a returned viable offer.

My suggestion would go one step further so as to allow credit (in some fashion) for prior payments made against a tax liability even if those payments were made outside of the compromise process (for example, through an installment agreement). If, as the Taxpayer Advocate suggests, Offers in Compromise are currently discouraged by the system, taxpayers that could have submitted an offer (but didn’t because of the procedures in place) should be given credit for payments they made before submitting an offer.

Friday’s Tax Quote.

“I shall never use profanity except in discussing house rent and taxes…”

-Mark Twain

Employee vs. Independent Contractor, Part II.

The decision whether someone is an employee or an independent contractor is not based on the preferences of the business or worker. Rather, it is based on the degree of control that the business has over the worker. Employees are subject to greater control while independent contractors are subject to less. The three considerations in making the worker classification decision are:

1) Behavioral Control,
2) Financial Control and
3) Type of Relationship.

Historically, the IRS had used 20 factors to determine the extent of control that a business had over a worker. These factors have, more or less, been incorporated into the three types of control listed above. The 20 factors are/were:

1) Is the worker required to comply with instructions?

2) Is the worker required to undergo training?

3) Are the worker's services integrated into the business?

4) Is the worker required to render services personally?

5) Does the worker hire, supervise and pay his own assistants?

6) Is there a continuing relationship?

7) Does the worker set his own hours?

8) Is full time status required?

9) Must the work be done on the employer's premises?

10) Must the worker perform services in an order of sequence set by the employer?

11) Must the worker submit oral or written reports?

12) Is the worker paid by the hour, week, or month; or is he paid a lump sum?

13) Is the worker reimbursed for traveling/business expenses?

14) Does the employer furnish tools and/or materials?

15) Is the worker required to make a significant investment?

16) Is the worker entitled to realize a profit or loss?

17) Is the worker entitled to work at more than one business at a time?

18) Does the worker make his services available to the general public?

19) Does the employer have the right to discharge the worker?

20) Does the worker have the right to terminate the relationship without performing the agreed upon services?

If someone is uncertain as to whether they should be classified as an employee or an independent contractor, they can file a Form SS-8 with the IRS which will make the determination. The Form SS-8 can be found at http://www.irs.gov/pub/irs-pdf/fss8.pdf

Employee vs. Independent Contractor.

Recently, the IRS has indicated that it will be increasing its scrutiny of worker classification. That is, are businesses properly classifying workers as employees or as independent contractors. Misclassification can have a significant impact on both a business and its workers. Some of the aspects of worker classification are discussed below.

Businesses: Businesses that have employees must withhold income and Social Security/Medicare taxes from the employee’s income, contribute their own share of Social Security/Medicare taxes and issue Forms W-2. Employers must also pay FUTA (unemployment) taxes. On the other hand, if the business works only with independent contractors, there is no withholding and only a Form 1099 - MISC must be issued.

Workers: An individual that is an employee will receive a Form W-2 and report the information on his or her Form 1040, Individual Income Tax Return. If he or she is an independent contractor, however, the individual will receive a Form 1099 - MISC, will have to report the income on a Schedule C and must pay Self Employment Tax (Schedule SE). Additionally, because the business will not withhold tax on payments to an independent contractor, he or she must have had the foresight to save a portion of the income to pay taxes (often this is made easier by making estimated tax payments throughout the year).

Businesses: If a business is treating its employees as independent contractors, it will be failing to meet its federal tax obligations. That is, it will not be withholding income tax and Social Security/Medicare tax from the worker. Moreover, it will not be contributing its own share of the Social Security/Medicare tax liability. Assuming that the employee does not pay these amounts on his or her own when filing their tax return (a safe assumption) it is likely that the IRS will look to collect the tax from the business.

This problem can cascade down to the officers or owners of the business that were responsible for withholding the taxes and paying them over to the U.S. Treasury. These “responsible persons” can become personally liable for these employment taxes if the IRS assesses the Trust Fund Recovery Penalty against them.

Workers: A worker that believes that he or she is an employee will have a big surprise when they receive a Form 1099 MISC and file their tax return. If they have not made any estimated tax payments he or she will likely find themselves looking at a large tax liability. All is not lost, however, if that worker should have been classified by the business as an employee. In such a case, (for years 2007 and thereafter) that worker should file a Form 8819 that, essentially, reports the misclassification. (See Form 8819 here: http://www.irs.gov/pub/irs-pdf/f8919.pdf)

A discussion on the factors used to determine if a worker is an employee or independent contractor will be included in tomorrow’s post.

Wisconsin’s Film Tax Credits.

On January 1, 2008, several tax credits for the film industry became effective in Wisconsin. These tax credits include the:

1) Film Production Services Credit.

2) Film Production Expenditures Credit.

3) Sales and Use Tax Credit.

4) Film Production Company Investment Credit.

These tax credits are being hailed as some of the best film tax credits in the United States. As the Wisconsin film production industry continues to grow, these tax credits should provide tremendous benefits to both film production companies and the Wisconsin economy. On May 16, 2007, I recorded a more detailed discussion of the Wisconsin Film Tax Credits in a podcast that can be found at http://www.wbb-law.com/podcast/#722

For information on how to obtain the tax credits and making movies in Wisconsin, see the Film Wisconsin Website: http://www.filmwisconsin.net/

For an article on the early success of the Wisconsin Film Tax Credits, see the article in the Wisconsin Journal Sentinel: http://www.jsonline.com/story/index.aspx?id=702482

Bankruptcy Is Not A Solution To All Tax Debts.

On January 3, 2008, the Milwaukee Business Journal announced that Northwest Airlines is seeking to settle its $329 Million tax liability in the Bankruptcy Court for $12.6 Million (see story here: http://milwaukee.bizjournals.com/milwaukee/stories/2007/12/31/daily22.html ) For most taxpayers, individuals and businesses alike, these numbers are well beyond the tax liabilities that they will ever face. Yet, regardless of the size of a tax debt, any taxpayer seeking to resolve a liability through bankruptcy should be aware that the bankruptcy protections are limited when it comes to tax debts.

A Chapter 7 bankruptcy is the type that can be used by individuals to eliminate most debts and can include certain income taxes. The bankruptcy rules as applied to tax liabilities can be complicated but should be kept in mind. As a general guideline, in a Chapter 7 bankruptcy before income tax debts are dischargeable,

1) The tax returns must have been due at least three years before filing for bankruptcy,

2) The returns must have been filed at least two years before filing for bankruptcy and

3) The taxes must have been “assessed” at least 240 days before filing for bankruptcy.

Some taxes can never be discharged in bankruptcy, including, payroll taxes, Trust Fund Recovery Penalty assessments (i.e. personal liability for employment taxes), and fraud penalties. Further, a person should be cautious as different rules may apply in Chapter 11, 12 or 13 bankruptcies.

Therefore, even if a person is contemplating bankruptcy, it may be necessary to address their tax liabilities separately, either during or after their bankruptcy proceeding. That is, if the tax debt is not old enough, or someone owes the wrong kind of tax, bankruptcy will not solve the tax problem.

Tax liens filed before the bankruptcy petition is filed will also remain in place following a discharge of the taxpayer’s debts. Such liens will need to be resolved or released before any property subject to the lien can be sold.

Friday’s Tax Quote:

“I’m putting all my money in taxes – it’s the only thing sure to go up.”

-Anonymous

Settling Tax Liabilities for Less than the Full Amount (the Offer In Compromise).

The law provides that a tax liability can be resolved for less than the full amount of the total debt. Sometimes, the tax debt can be resolved for a fraction of the total. This procedure is known as an Offer in Compromise. In the right circumstances, an Offer in Compromise can be used to get a person out of tight spot.

An Offer in Compromise is generally available to taxpayer in three circumstances 1) when the person or business cannot afford to pay (Doubt as to Collectability), 2) when the person or business may not be liable for the tax asserted (Doubt as to Liability), or 3) other special circumstances (Effective Tax Administration).

When a person cannot afford to pay a tax liability, they may be eligible to settle their debt on the basis of Doubt as to Collectability. Resolving the debt this way does not afford the taxpayer any substantial amount of privacy concerning their financial status, but is often well worth it. The taxpayer must prepare a financial statement outlining all of his or her assets and liabilities. After reviewing the financial statement, a reputable tax professional can help determine for how much the IRS will settle the debt.

A person can settle their debt for less than the full amount of the debt if there is a doubt as to their liability for the tax due. This is generally used to challenge whether the IRS’ calculation of the tax liability was correct.

A liability may also be resolved for less than the full amount of the tax if there are special circumstances that warrant a resolution of the debt. For the IRS to settle the debt on this basis, the IRS must be convinced that, in spite of the fact that a taxpayer can afford to pay a tax owed, other special circumstances exist to compromise the debt.

When faced with a large tax liability, an Offer in Compromise should be considered. While not available in all circumstances, when available, this procedure can lift a heavy weight from a person’s shoulders.

Welcome to the Tax Law Forum!

This blog has been created by Rob Teuber, an attorney with the Law Firm Weiss Berzowski Brady LLP. The goal of this blog is largely to discuss the various issues that a person or business must face when dealing with a tax problem. These problems come in many shapes and sizes and anyone can be caught up in any part of the tax process. Yet, regardless of where in the process you are, there are procedures in place that can be used to resolve any tax problem. Certainly, not all tax problems can be resolved in the same way, but every tax problem has a solution. These solutions, more often than not, can be favorable to the taxpayer.

Examples of tax issues that will be addressed in this blog include:

- IRS tax audits and examinations.
- Appeals of audits and Notices of Deficiency.
- Negotiating tax disputes with government attorneys.
- Tax Court cases.
- Tax collection issues.

In discussing these aspects of the tax law, this blog will comment on responding to an IRS summons, IRS requests for information, handling tax audits, appeals of audit findings, IRS Notices of Deficiency, decisions and issues arising from the Tax Court, handling fixed tax liabilities, Offers in Compromise, Installment Agreements, Collection Due Process hearings, Notices of Federal Tax Liens, wage garnishments, bank account levies, and penalty removal/abatement.

I hope that you find these discussions insightful.

-Rob Teuber