| Foreign Tax Credits |
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| Congress passed legislation authorizing foreign tax credits to relieve a taxpayer of the double tax burden of paying tax on foreign source income to both the United States and a foreign country. Generally, if the foreign tax rate is higher than the U.S. rate, there will be no U.S. tax due on the foreign income. If the foreign tax rate is lower than the U.S. rate, U.S. tax on the foreign income will be limited to the difference between the rates. The foreign tax credit can only reduce U.S. taxes on foreign source income; it cannot reduce U.S. taxes on U.S. source income. More... |
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| Offers in Compromise |
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| In certain situations, the Internal Revenue Service may be willing to accept less than the full amount owed by a taxpayer for federal income taxes. The IRS is willing to compromise with a taxpayer under four circumstances: first, there is doubt as to whether the taxpayer actually owes the taxes; second, there is doubt that the assessed tax is correct; third, there is doubt as to the actual collectibility of the amount owed; and fourth, for effective tax administration. In the last category, the IRS will consider less than full payment even the tax is owed, the amount is correct, and it is collectible but to do so would create a severe economic hardship on the taxpayer and would be unfair and inequitable. More... |
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| Installment Agreements |
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| The Internal Revenue Service wants you to pay as much of your federal income tax liability as soon as possible. In order to implement this goal, the IRS allows taxpayers who cannot pay the full amount owed on April 15th to apply for an installment agreement, under which the taxpayer will make equal monthly payments until the full amount of the debt to the government is eliminated. More... |
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| Partnership Audits |
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| Even though it is the individual partners, not the partnership, that are responsible for reporting and paying taxes on any gains or losses recognized by the partnership, audit proceedings on partnership items are conducted on the partnership, not the individual, level. More... |
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| Abusive Tax Return Preparers |
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| Return preparer fraud usually involves the intentional preparation and filing of false income tax returns by unscrupulous preparers who may claim inflated business or personal expenses, false deductions, unallowable credits, or excessive exemptions. Specifically, the IRS has found that dishonest preparers often fill out fraudulent schedules showing false supplemental losses or expenses from a business that have not been paid by a taxpayer in order to offset certain items of income. Another area of abuse is the claim of false or inflated itemized deductions for charitable contributions or medical and dental expenses, along with false claims for earned income credits. The taxpayer may or may not have knowledge of the false items shown on the tax returns; however, it is the taxpayer who has the ultimate responsibility for all the information on the return, no matter who prepared it. More... |
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