Offers In Compromise - No Hype Tips

Have you seen the commercials and billboards advertising an opportunity to settle your back taxes for pennies on the dollar, letting you go on to live an affluent lifestyle?  Uh, no.

The good news, though, is that the IRS recently announced more flexibility in its Offer-In-Compromise terms.  The intention is to reach out to struggling taxpayers.  Notice the keyword "struggling."  If the IRS believes they can collect the full amount from you, you will still owe.  They are very patient.

As more fully explained in the IRS announcement,, the flexibility "will assist some taxpayers who have faced the most financial hardship in recent years...who are struggling to make ends meet."

An Offer-In-Compromise (OIC) is an agreement between the taxpayer and the IRS that allows a taxpayer to pay his or her liability for less than the total amount.  Again, it is important to emphasize that an OIC is usually not accepted if the IRS believes the liability can be paid, either all at once or over time.  If you apply for an OIC, the IRS will examine your income and assets.

If you do not qualify for an OIC, other payment arrangements may be made.

If you need assistance in resolving a tax liability, consult either our firm or any other competent professional.

Still Working on College Financial Aid (FAFSA)?

College-bound students and their parents typically want to make every dollar and every minute of the college experience count including money spent on tuition and time spent on the college financial aid application process. The Internal Revenue Service is helping minimize the time spent on the completion of the Free Application for Federal Student Aid (FAFSA) form by automating access to federal tax returns with the IRS Data Retrieval Tool. This tool provides the opportunity for applicants to automatically transfer the required tax data onto the FAFSA form.

For more information, follow this link:

http://content.govdelivery.com/bulletins/gd/USIRS-40cfde?reqfrom=share

Indiana Inheritance Tax - New Phase Outs

Last March, Governor Mitch Daniels signed bills that would phase out Indiana's inheritance tax.

According to WTHR Channel 13's website, the phase out plan approved by legislators will decrease the inheritance tax over time.  First, the amount not subject to tax (for immediate family) would increase from $100,000 to $250,000.  Then the tax rate on what's left will decrease 10 percentage points per year until the rate is zero.  This should eliminate inheritance tax in Indiana by 2021.

Note that this does not affect Federal inheritance taxes, which continues to be a complex issue due to ever changing tax law.

Small Tax Exempt Organization Filing Deadline May 15

If you are active in or otherwise affiliated with a small tax exempt organization, the IRS is reminding such organizations to file Form 990-N by May 15 to stay in compliance.  This You Tube video is a minute long but provides good information:

http://www.youtube.com/watch?v=9NmbljVGW1Q

Indiana Personal Property Tax Returns Due May 15

This coming Tuesday, May 15th, two deadlines are coming up regarding property taxes:

• Tax bills for property, both real and personal, held in 2011;
• Tax forms for property you held as of March 1, 2012.

The tax bills are somewhat self-explanatory - a document with a balance due at the bottom.  If you have a business, you should be taxed on buildings and lands, of course.  You are also taxed on what is called your "tangible personal property" (commonly called your "stuff" - office furniture, equipment, computers, and the like).

Your buildings and lands are taken care of by the assessor.  He or she comes around, checks out your location, makes an assessment, sends you a bill, you don't like it, you consider appealing.  Your stuff is different.  In Indiana, you fill out forms and mail them to the assessor.  The two main ones are Forms 103 and 104.  You may also have others depending on your situation.

Form 104 is not unlike a summary page.  It lists your total personal property ("stuff").

Form 103 contains more detail.  It also lists your total, and additionally separates into subtotals by years you acquired the assets and their estimated useful lives (in years).  The newer the stuff, the more it is assessed.

If you are a farmer, you would file a Form 102.

Indiana's Department of Local Government website forms page lists 27 forms total that may or may not apply to you.  Consider hiring a CPA familiar with personal property taxes to help you navigate this maze of forms.

All businesses active in Indiana are required to prepare business personal property returns.  For assistance, contact Dehmel & Associates at 317-248-2202.  To learn more about Indiana's personal property tax system, visit Indiana's Department of Local Government Finance website at www.in.gov/dlgf.

You've Filed Your Tax Return - Now What?

by Jeff Hoots, CPA

Congratulations!  You have closed another year and fulfilled your duty to file your tax return.  What are you thinking?  Joy?  Relief?  Angry over a large balance due?  Is this the end of the story until next year.  Is it?

This could be the best time to be thinking about your tax return due next year.  Why?  Thinking now could save you dollars and problems later.  Here are some questions to consider:

• How did I do compare to last year?  Made money?   Lost money?
• How will I do next year compared to this year?  Will my income increase or decrease?
• What life changes am I making that will affect me financially?  Am I starting or expanding a business?  Downsizing?  Retiring?  
• For my personal tax return, am I adding children, or losing children to adulthood?
• What happens if I get married?
• I am newly single.  What now?

We can help!  Call Dehmel & Associates, P.C., at 317-248-2202 for more information about our tax planning services.