Be Careful when it comes to Tax Relief!

tHIS IS A GREAT ARTICLE ABOUT THAT TAX RELIEF COMPANIES. when YOU WANT TO REALLY RESOLVE YOUR TAX ISSUES, CONTACT SAGGIO MANAGEMENT GROUP AND WE WILL WORK WITH YOU TO RESOLVE THOSE ISSUES.

http://www.webcpa.com/news/FTC-Puts-American-Tax-Relief-Out-Business-55894-1.html?ET=webcpa:e1064:160129a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=WebCPA_Daily_100710

Chicago

(October 6, 2010)

By WebCPA Staff

At the request of the Federal Trade Commission, a federal judge has halted the business operations of American Tax Relief, a company that heavily advertised its ability to help taxpayers who were in trouble with the IRS and allegedly bilked consumers out of more than $60 million by falsely claiming it could reduce their tax debts.

The company’s California state business license was suspended last year for not paying its own taxes, the FTC alleges. The FTC is seeking to make the defendants pay restitution to victims.

“We’ve made it a top priority to go after scammers who try to exploit the financial hardship of others,” said FTC Bureau of Consumer Protection director David C. Vladeck in a statement. “For people having a tough time paying their taxes, the last thing they need is to lose more money to a fraud.”

According to the FTC, American Tax Relief LLC falsely claims in TV, radio and Internet ads that it can settle consumers’ delinquent federal and state taxes for a fraction of the amount they owe. The company also falsely claims that it can remove tax liens and stop wage garnishments, bank and tax levies, property seizures, and “unbearable monthly payments.”

For example, the company’s Web site states, “The IRS is currently accepting a fraction of back taxes owed to them for those who qualify. The IRS is allowing the people with delinquent tax liabilities a ONE-TIME opportunity to settle the debt ONCE AND FOR ALL. But at the same time, the IRS does not advertise, promote or even voluntarily suggest this program.”

A visit to the American Tax Relief Web site now displays a simple message from the FTC: “The Federal Trade Commission has filed a lawsuit against American Tax Relief LLC alleging that it has engaged in deceptive practices relating to the advertising, marketing, promotion, offering for sale, or sale of tax relief services. The United States District Court for the Northern District of Illinois has issued a temporary restraining order prohibiting the alleged practices. You may obtain additional information directly from the FTC at www.ftc.gov.”

The FTC alleges that the company has continued its deceptive practices even after federal agents executed a criminal search warrant on the operation’s Beverly Hills business premises in April 2010. At that time, criminal authorities seized money from bank accounts and a Ferrari from the company’s owner, and placed liens on two residences, including a $3.4 million house. At the time, one of the company’s owners was leasing six other vehicles, including a Rolls-Royce, a Bentley, two Porsches, and two Mercedes-Benzes, according to exhibits the FTC filed in court.

American Tax Relief charges up-front fees ranging from about $3,200 to $25,000 for the purported tax relief services. The company’s ads include a toll-free number for consumers to call for a “free consultation.” After speaking briefly with commission-based sales people who are supposedly “tax consultants,” virtually all consumers are told that they “qualify” for a tax relief program, and that American Tax Relief can help them significantly reduce their tax debts, the FTC complaint alleges.

In reality, very few of the company’s customers qualify for the promised tax relief programs, which are available only in very limited circumstances. Most people who hire the company would qualify at most for installment payment plans, which still require payment of the full amount owed, and which many taxpayers can easily arrange by themselves.

Many consumers are told that they qualify for an “offer in compromise,” which the Internal Revenue Service states is its only program that allows people to avoid paying the full amount of back taxes, and is available only in limited circumstances; taxpayers are eligible only after other payment options have been exhausted and the person’s ability to pay has been reviewed.

Other consumers are told that they qualify for a “penalty abatement,” which the company claims will eliminate both accumulated penalties and interest stemming from late payments. However, a penalty abatement is considered by the IRS only in very limited circumstances for people who have “reasonable cause” for the late payments, such as death, serious injury, natural disaster or the like. The FTC alleges that the company does not gather sufficient information from consumers to know whether they would be likely to qualify for either an offer in compromise or a penalty abatement.

The FTC’s complaint names Alexander Seung Hahn, Joo Hyun Park and American Tax Relief LLC. Park’s parents, Young Soon Park and Il Kon Park, are named because they are allegedly holding funds obtained from the defendants’ customers. On Sept. 24, 2010, a federal judge in Chicago entered a temporary restraining order prohibiting deceptive claims, freezing the defendants’ assets, and appointing a receiver to manage the company.

The FTC vote to file the complaint was unanimous at 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

To help consumers who may be having trouble meeting their tax obligations, the FTC created “Owe Back Taxes? Tax Relief Companies Can Result in More Pain than Gain,” which is available on the agency’s Web site.

A special day!

Today I write a personal note to share the courage and strength of my wife and life partner. Just over 5 years ago my wife was diagnosed with Breast Cancer. We were all in shock. We had just started our own business and our two boys were just 4 and 7. My wife met with the doctors and they planned a strategy to fight the cancer. With faith in God and more determination then I expected, she fought the battle with surgery exactly five years ago today. I am so grateful today that she celebrates the five year milestone of being cancer free. She is the love of my life and her trust in God and her determination to overcome this is a testament to her personal strength and character. She is my inspiration today just as she was five years ago.

We encourage all women to get the necessary tests to check for this. It was a routine test which discovered my wife's cancer and we are convinced that saved her life. We at Saggio Management Group and my wife and I pray for all those who have overcome the disease, battle with the disease and those who have gone out fighting.

AMT Will Hit Middle Class

Here is a great report on AMT. I was speaking to a client about this yesterday and with his income of just over $150,000, he is looking at an AMT tax of an additional $9,000. Saggio Management Group can assist you in limiting your tax exposure, call today to schedule a year-end tax check-up.

http://www.foxbusiness.com/story/markets/industries/government/alternative-minimum-tax-hit-middle-class/?cmpid=prn_baynote-js_Alternative_Minimum_Tax_Could_Hit_Middle_Class

By Rich Edson

FOX Business

In a ritual more common than Congressional elections, lawmakers are again considering an exemption for millions of Americans from the Alternative Minimum Tax [AMT].

Senate Finance Committee Chairman Max Baucus discussed taxes with committee Democrats last week, according to a committee aide. Baucus will “hold a bipartisan members meeting this week to discuss the committee’s agenda for the rest of the year and hear senators’ thoughts on how to handle provisions – like the AMT – that need to be addressed this year,” said the aide.

A spokesperson for the House Ways and Means Committee said only that, “Congress will patch the AMT for 2010,” though he did not provide specifics or timing.

Congress wrote the Alternative Minimum Tax in 1969 to limit deductions wealthy Americans took on their income tax. In 1970, 155 Americans paid the AMT. But Congress never accounted for inflation and over the past 40 years the tax has snagged millions of middle-class Americans each year.

Recently, Congress has patched the AMT annually, meaning it passes a one-year exemption for most of the Americans the tax would otherwise hit. Last year, Congress excluded most couples earning a combined $70,950 and less and individuals making $46,700 or less from the AMT.

Congress usually passes the AMT patch as an afterthought, though partisanship this year has slowed lawmakers’ progress on even routine measures.

If Congress fails to exclude millions of middle-class taxpayers this year, the Congressional Budget Office says the tax will take $102.2 billion from more than 27 million Americans. Of those taxpayers, nearly two thirds will make between $50,000 and $100,000 this year. Last year, with a Congressional exemption as part of the stimulus bill, 4.5 million Americans paid $33.5 billion.

Excluding those taxpayers cost the U.S. Treasury about $70 billion. Some Democrats want to exempt most middle-class taxpayers for the next decade. Estimates show a 10-year patch would cost about $660 billion.

Health Care Police

This is just plain scary. Let Saggio Management Group help.

http://mymoney.m.foxbusiness.com/quickPage.html?page=27036&content=43376707&pageNum=-1

Health Care Reform Evaders: How the Uninsured Will be Caught

Oct 04, 2010 2:12 PM EDT

In 2014, we'll enter a brave, new world. Health insurance will no longer be a luxury. It will be a requirement. Health care reform will be almost fully phased in, and every man, woman and child in the United States will be required to maintain health insurance coverage – with only a few exceptions.

In an attempt to make the transition easier, the federal government will set up health insurance exchanges, offer coverage subsidies and make group health plans mandatory at big businesses.

In case the carrot approach to encouraging compliance doesn't work, the federal government is ready to pull out the stick. The "individual mandate" law includes penalties for people without health insurance that start at $95 or 1 percent of an individual's annual income for the first year and rise until they hit $695 or 2.5 percent of annual income, whichever is greater. For families, the penalties for not buying health insurance coverage could reach $2,085 per household per year.

Enforcing mandatory health insurance coverage

How will the government identify the many people who are certain to either ignore the "individual mandate" law or simply remain unaware of it? If the IRS knows, it's not saying. According to an IRS spokesperson, rules and regulations on enforcement have not been developed yet.

What is known is that although the IRS has been appointed enforcer of the insurance mandate, it apparently plans to rely heavily on health insurance companies for tracking. Speaking to reporters in April, IRS Commissioner Douglas Shulman indicated that health insurance companies will eventually be required to submit paperwork similar to 1099 forms each year for everyone they insure.

According to a Bloomberg Businessweek report, those not complying with the insurance mandate will receive letters from the IRS notifying them that penalties may be deducted from any expected tax refund. The bigger issue may be how the IRS plans to enforce the mandate for those who aren't owed a refund or who don't file taxes at all.

Outside the Washington Beltway, many observers wonder if enforcement will really have any teeth. Oklahoma State Insurance Commissioner Kim Holland told an audience at the University of Oklahoma-Tulsa, "As it stands today, I don't think this mandate is enforceable." In remarks reported by Tulsa World, Holland went on to explain, "The penalty will be collected by the IRS, but it took away the IRS tools to enforce the law. They cannot fine you an additional amount. They can't charge interest, and they can't file a lien on your home."

Lack of money could hamper enforcement

Darrin Mish, a Florida-based tax attorney, has been following the discussion on mandatory health insurance with interest. "This is unlike anything [the IRS] has done before," he says. According to Mish, the biggest challenge to enforcement may be the lack of additional funding appropriated to the IRS to carry out its heath care reform duties. "Historically, Congress always knee-caps [the IRS] and doesn't give them what they need to get the job done."

It is expected that the IRS will begin the process of promulgating rules for enforcement of the individual mandate as early as next year. Only then will the process for reporting, tracking and enforcing the health insurance coverage mandate be known. As Mish reminds taxpayers, "Just because they don't know [how to enforce] now, doesn't mean they won't figure it out later."

Be prepared for a disaster

Here is a great article on the documents you need in the event of a disaster. Saggio Management Group has a great package of services for clients who need remote access and online storage. Give us a call today and let us design a system for you.

http://businesstraveler.m.foxbusiness.com/quickPage.html?page=23621&content=41639848&pageNum=-1

Documents you Need When Disaster Strikes

May 13, 2010 9:08 AM EDT

When fire roared through Adelaide Zindler's San Diego neighborhood in the middle of the night, her first thought was to alert an elderly neighbor. The last thing on her mind was the whereabouts of financial records stored in her home.

"I was thinking family and I was thinking friends and I was thinking safety," Zindler says.

Uprooted from home for days, and unsure where other relatives were, she and her husband needed a month or two "before we got to a place where we were thinking about paperwork again," she says.

By that point, they were late on their mortgage payment. The financial institution was unforgiving, and the couple's credit score took a hit.

The Zindler's money woes mirror those of others whose lives are abruptly turned upside down because of a disaster. But it doesn't have to be that way.

Financial advisers say people who identify and prepare key documents long before calamity strikes can avoid unnecessary damage to their personal finances in the wake of a fire, flood, hurricane or other disaster.

What you need

All homeowners and renters should have a list of "must haves" and "like to haves" -- items they will need, or want, after a disaster, says Mitchell Freedman, founder of MFAC Financial Advisors in Westlake Village, Calif., and an editor of theAmerican Red Cross' "Disaster Recovery: A Guide to Financial Issues."

Key documents to have at hand include:

Mortgage documents or rental agreements.

Homeowners, renters and automobile insurance policies.

Financial statements and account numbers.

Copies of prescriptions for medications.

Tax records.

Freedman also suggests having a small stash of cash at hand. If the electricity is out, credit cards won't work for purchases.

Donna Childs, a former reinsurance industry executive, was living within sight of the World Trade Center when the towers collapsed Sept. 11, 2001. Hers was the only residential neighborhood evacuated, and she was kept out of her home for a couple of months.

Because of her business background, Childs already had all her personal and business documents scanned in and stored online remotely when she had to flee with just an overnight bag.

At a time like that, "you shouldn't be thinking about documents, you should be thinking about safety," says Childs, who later wrote the book "Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses."

Neither Freedman nor Childs are fans of using bank safety-deposit boxes to store key documents. They suggest that a bank could be destroyed or inaccessible after a disaster.

Instead, Freedman uses a portable hard drive with his computer so he can grab it and go.

"It's one of the best insurance policies you'll ever have," he says.

Childs prefers remote online storage, and recommends sharing the password with a trusted family member or friend who can access the account in case of an emergency.

Some banks now offer online safety-deposit boxes that can protect documents, photos and videos.

Have proof

In addition to having access to key documents, it's important to have proof of your valuables when filing insurance claims.

Michael McRaith, chair of the Illinois Department of Insurance and active in the National Association of Insurance Commissioners, says individuals should go room by room through their homes, writing down the contents and making special note of things like antiques, jewelry and collectibles.

He recommends keeping one copy of the inventory at home and a second at another location, such as with a relative, at the office or in a safety-deposit box. The list should be updated periodically, with receipts kept for big-ticket items.

Having photographs or videos of your possessions is crucial, Freedman says. Without it, "it's difficult to know how many shirts you had, how many pair of pantyhose a woman had."

If someone needs to file a claim after a disaster, the inventory, receipts, photos or videos help verify their existence and value, and ensure no one makes a $1,000 claim for something really worth $100, McRaith says.

Those who have no insurance or are under insured can record a loss on their state and federal income tax forms. Having documentation of their possessions helps provide the proof they need, Freedman says.

But the key is advance preparation. By doing so, "there's lots of peace of mind," Childs says. "That's really priceless."

Are they Contractors or Employees

We get this kind of questions all the time. "How do I make my employees sub-contractors?" This is a tricky area and one with many pitfalls. Here is a great article on the issue. For more specific guidance, give Saggio Management Group a call.

http://smallbusiness.m.foxbusiness.com/quickPage.html?page=20273&content=43292972&pageNum=-1

Labels Matter to the IRS--Keep Out of Trouble

Oct 01, 2010 2:25 PM EDT

When business owners start looking into hiring employees, many are overwhelmed at how expensive it can be. Of course, you must pay this person a decent wage, but there are even more expensive costs: taxes.

And there are a lot of them to think about: unemployment taxes, payroll taxes (7.65% of the employee's total salary) and other taxes.

Some business owners try to sidestep these tax issues by hiring workers as "independent contractors." Sounds like a good idea, right? Independent contractors do the work but save you the hassle of payroll taxes, tax withholding and unemployment taxes. Hold on! Before you jump aboard the independent contractor bandwagon, you need to understand that the IRS has a say in the matter.

The IRS has very strict rules for determining who is an independent contractor and who is an employee. How you classify your workers revolves around three basic characteristics:

Behavioral control: Do you as the business owner have the right to determine how the work is done via training or instructions, for example?

Financial control: Do you as the business owner have the right to determine or control the financial or business aspects of the work?

Type of relationship: Do you or your workers perceive an employer-employee relationship?
If the answer to all three questions posed above is yes, you probably have an employee. On the other hand, if all the answers to these questions are no--meaning you can only direct or control the results of the work done, but not the means and method of completing the work--then you likely have an independent contractor.

Of course, not all employment situations are so cut-and-dried. What if the answers to the above questions are not all "yes" or all "no"? For example, what if your worker can decide how the work gets done, but you are in control of the financial components of the work? If your worker's characteristics are on the non traditional side, then you can ask the IRS to make an official determination on your worker's status. You can do this by filing IRS Form SS-8, which can be found at IRS.gov.

If you are ever in doubt, get a determination. Guessing wrong can be a costly mistake and can bring a whole lot of trouble to your business's door. Using the wrong classification can lead to some big tax bills and leave you vulnerable to huge penalties and interest for the unpaid payroll taxes. So do the right thing for your business and make sure you properly label your work force, and then follow through with the proper tax obligations. When it comes to the IRS, doing it right the first time is the key to fewer tax headaches.

The City of Wilmington Story

Here's the whole story in reference to the City of Wilmington wage tax on S Corps.

http://m.delawareonline.com/detail.jsp?key=352155&rc=bz&full=1

Baker: Repeal policy on wage tax
By ADAM TAYLOR The News Journal
October 01, 2010 06:10 AM

Facing growing opposition from the city's business community, Wilmington Mayor James M. Baker Thursday asked council to repeal a controversial new tax policy, even though he believes objections to it are wrong.

Baker said he's making the move because many business owners have said the additional tax burden could force them to move to the suburbs, which would make the city's poor financial condition even worse.

"I don't know if the threats are real, but I will not take the chance of losing businesses and further weaken the city's fiscal base," Baker said Thursday.

The business leaders who have been fighting to remove the law from the books applauded Baker's decision.

The City Council president expects the mayor's request will pass.

Baker, though, asked a group that advises city government on fiscal issues to examine whether there is a better way to tax entities known as "S" corporations.

Baker's announcement came one day after a city agency, called the Administrative Board, passed a series of regulations related to a law passed last year that broadened the way Wilmington could tax "S" corporations.

There are about 1,000 such entities in the city, which include medical practices, law firms and real estate agencies.

Council President Norman D. Griffiths said the group from Wilmington's corporate community who attended Wednesday's Administrative Board meeting were seriously thinking of relocating and played a role in Baker's announcement Thursday.

"All those people in the same room saying the same thing can't just be an idle threat," Griffiths said. "I'm glad to see him do it."

"S" corporation employees are paid salaries, but the workers and shareholders also get income that is declared "distributions." The old law allowed the city to impose the 1.25 percent wage tax on salaries only. The new law made the distributions also subject to the wage tax.

When the law was passed, city officials said some of the "S" corporations were skirting the law by declaring low salaries and taking large amounts of distributions. But many officials from the corporations said the law was a sneaky way for the city to get more wage-tax money.

City finance officials estimate the law would generate about $3 million. The city already is facing a $5 million operating shortfall, just three months into the fiscal year.

"This places a tremendous additional burden ... to overcome growing budget pressures that will now swell to $8 million, resulting in the likely loss of jobs for city employees and a corresponding reduction of city services," Baker said.

But members of City Council and the businesses affected said Baker's request is good because losing companies would cost the city more than it could ever hope to collect in extra wage taxes.

"I'm glad the mayor has finally looked at this thing in its totality and is not focused on the short-term windfall, but on the long-term impact of not only losing businesses, but creating a climate that would make recruiting new businesses here nearly impossible," Councilman Steve Martelli said.

Earlier in the week, Martelli said he would introduce a measure to repeal the law.

Baker essentially is doing the same thing, but in a more moderate way.

Baker said he also will ask the Wilmington Economic and Financial Advisory Council to review the issue of how "S" corporations should be taxed. The council meets four times a year to monitor the city's financial health. Baker wants the advisory council to come up with an alternative way to tax the "S" corporations on more than just employee salaries.

Martelli's proposal -- which he said he will continue pursuing -- would entirely eliminate city taxation of "S" corporation distributions.

Griffiths said he thinks Baker's request to repeal the law will pass. Councilman Bud Freel will introduce it Tuesday and it will come to council for a final vote in November.

Griffiths added that it would be difficult to get the 13-member council to get the same law back on the books in the event the advisory council determines that the city's law is reasonable.

"I think that whatever gets brought back to the council next year will have a tough time getting the seven votes required to pass it unless it has the full support of the business community," Griffiths said.

Rich Heffron, a lobbyist for the Delaware Chamber of Commerce, agreed.

"I don't think they understood the seriousness of this situation until now," he said.

Heffron added that state Rep. Gerald Brady's announcement that he would consider a law that could tighten the city's authority to collect the wage tax, which was created by the state Legislature in the 1960s to help the city raise money, was also a factor.

"The last thing the city wants is to go down to Dover and fight this battle," he said.

The wage tax, a levy on earned income for everyone who lives or works in the city, provides more than 40 percent of revenue for the city's $147.7 million operating budget. It's the city's largest single source of money.

Fred Sears, board president of the advisory council, said he hopes to complete Baker's request in three meetings.

The board is considered independent, but its members are appointed by Baker. One member, Geoff Langdon, is a consultant for the city and his focus is helping them collect as much wage-tax money as possible.

Sears said Langdon might have to recuse himself from the process, but Baker's Chief of Staff, William S. Montgomery, said that's not necessarily true, because Langdon is an expert on the issue.

State Chamber of Commerce President Jim Wolfe said he's comfortable that the advisory council will be fair in assessing the issue of how to best tax "S" corporations.

Scott Johnson, a real estate developer who co-owns the Hercules building, has tenants that are "S" corporations. Keeping his building full would be hard if the new law isn't repealed, he said.

"This is a very complicated issue and it's a good thing that the business community is well-engaged in the process now," Johnson said.

Ann G. Riley, president of Gilpin, Van Trump and Montgomery Inc., a mortgage company that has been in Wilmington since 1865, said the "S" corporations would like to help the city get out of its financial mess.

"We're obviously pleased with the mayor's decision," she said. "It really has made all of us want to put our business minds together and come up with ideas to help the city with the shortfall it has."

Councilman Freel said he wants to make sure that whatever the advisory council comes up with doesn't allow people who are currently abusing their "S" corporation status to continue to do so.

"Most people are declaring reasonable salaries, but not everybody is and that concerns me," he said.