Alabama Tax Legal Questions

Before you decide to sue someone, your first question should always be, "What are my damages?" If you have no bills, costs, fines, or other monetary damages as a result of the tax preparer losing a form, then there is no reason to sue. If you do have any damages, then you need to assess how much and whether it's worth bringing a lawsuit. Form 1098-T is filed with the I.R.S. by your educational institution. Therefore, you can contact the I.R.S. and order your wage and income transcript, which will include the Form 1098-T that was filed. If one was never filed with the I.R.S. and the educational institution doesn't have one or refuses to give you one (which they shouldn't), then you would just need proof that you paid tuition to eligible educational institution. This could be in the form of an invoice, receipt, check, etc. Because you should easily be able to obtain a copy of the Form 1098-T, you don't have any damages for which you could sue. This is a small problem that is easily fixed by doing a little legwork. At best, you could file a tax preparer complaint with the I.R.S., and the I.R.S. may decide to civilly fine the preparer for misconduct, but I don't see where you would have any damages that would warrant filing a civil claim. Lastly, always keep copies of important financial documents. Although tax professionals are supposed to maintain records that you give to them, you always want to insure that you have a copy for your personal records.... Read Answer

In Alabama, the Business Privilege Tax (BPT) is assessed against any business entity that is in existence. The law is worded in such a way that the BPT is owed merely due to the entity's existence, and thus whether a business actually operated does not affect the fact that the BPT is owed. The minimum amount for the BPT is $100 annually, and the amount of the BPT increases as the business earns more money. In order to prevent owing the BPT in the future, you should formally dissolve the business entity. Otherwise, it will continue to accrue BPT as long as it is in existence. The BPT is assessed against the business entity. You should not be personally liable for the BPT, unless the Alabama Department of Revenue has entered an assessment or filed a lien that specifically lists your individual name.... Read Answer

The certificate of release for a federal tax lien should list the tax year(s) that were released. This document means that the balances for those years were resolved, either due to you satisfying the lien via payment, or due to the statute of limitations for collection expiring. Although the lien is released, it will remain on your credit history as a negative item unless you apply to have the lien withdrawn.... Read Answer

If an adult child does not live with you, then you can not claim them as a dependent. There are separate rules which allow you to claim medical expenses paid for someone else as a deduction, but those rules also require that the person has lived with you for the entire year. Thus, if your adult child does not live with you, then you can not deduct medical expenses that you've paid on their behalf. You can find this and more information relating to deducting medical expenses in the I.R.S.'s Publication 502.... Read Answer

When you complete the application for a PTIN, the only thing that they ask about regarding your criminal record is felony convictions. A DUI is not a felony conviction unless it is your third DUI conviction within a five year period. Generally speaking, an alcohol related offense would be the least of the I.R.S.'s concerns when reviewing your PTIN application. The felonies they would be most concerned with are any felonies relating to financial crimes or crimes relating to forgery, perjury, etc. But again, a first time DUI conviction is not a felony, so it should not have to be mentioned on your PTIN application, as the application only asks about felonies.... Read Answer

This depends on who you are attempting to report the unearned income to and why. Because you posted this question in the tax section, I am assuming you intend to report someone's unearned income to the Alabama Department of Revenue or I.R.S. Generally speaking, they are going to want documentation of earned income, such as images of processed checks, bank statements, or wage earning statements. A voicemail in which someone verbally indicates that money was or will be received/sent does not prove that the money was actually received/sent.... Read Answer

She needs to call the tax board asap. They have no authority to do this to her, but if they tried to contact her in the past and she did not receive their communications or ignored them, they estimated the tax and now are trying to collect it. The only way to get the garnishments to stop and to get her money back is to start a dialog with the tax board. If she cannot or does not feel comfortable talking to the board on her own, she should talk to a tax attorney who should be able to easily help her resolve this unfortunate situation.... Read Answer

First off, I'm assuming you're both single.  As for the sale of your friend's house, if the house was your friend's primary residence and your friend used it as the primary residence for 2 out of 5 years before the date of sale, then a gain of up to $250,000 is excluded from tax.  Now concerning your house.  There are 2 ways the transaction can be structured.  First, your friend can make a gift to you of the amount.  This way you will own your house 100% and you will have no debt.  Under this approach, your friend will not own any of your house.  2nd, if your friend wants to own a portion of the home, then you must sell that portion to your friend.  Again, if the gain on sale is less than $250,000, you can exclude the gain.  Neither of you will be able to exclude the gain on the sale of your home, provided your friend acquires an interest in the home, for 2 years, so if you sell the home within the next 2 years, both of you will have to pay tax on any gain.... Read Answer

Did your preparer e-file your return? If so, you needed to sign an authorization, IRS Form 8879, in which you certify that you have examined the tax return and schedules and that all information is true, accurate, and complete. Did you sign the 8879? Did you review the return that was going to be filed by e-filing? If your return was e-filed by your preparer, and you did NOT sign IRS Form 8879, go to your local IRS office and explain the situation. If you did sign Form 8879, use IRS Form 4506 to request a copy. It will cost you some money to get a copy of the actual return. If you just want the information by line item, use Form 4506-T to get a free *transcript* of your return (not the actual return, itself). If your return was mailed by your preparer, the preparer should have required you to sign a paper saying that you did not want to e-file your return. Did you sign such a statement for the tax preparer? If not, and your return was mailed by the preparer, go to your local IRS office and explain the situation. If the original was provided to you to mail yourself, and you did not receive an extra copy nor made a copy yourself, use IRS Form 4506 to request a copy. It will cost you some money to get a copy of the actual return. If you just want the information by line item, use Form 4506-T to get a free *transcript* of your return (not the actual return, itself). I hope this helps.... Read Answer

It is very rare that the I.R.S. will issue a warrant for anyone's arrest. Although there are some tax issues which can escalate to criminal charges, most do not. The fact of the matter is that if a taxpayer owes the I.R.S. money, they'd much rather work to collect the money civilly than to attempt to charge the person criminally; throwing someone in jail is not going to pay the debt owed to the I.R.S. In all likelihood, if the I.R.S. is holding you responsible for some action, you would have received mailed correspondence from them first. If you have moved since your last tax return, then the I.R.S. may have sent notices to an old address. If you really want to clear this issue up, then you may want to call your local I.R.S. service center (http://www.irs.gov/localcontacts/article/0,,id=98236,00.html) and ask them to review your account to see if any notices have been sent, or if there is any other activity on your account. If they want to know why you're calling, then you can simply state that your former fianc? has implied that he has filed a false tax-related report against you, that he has stated that the police are now involved, and that you wanted to check directly with the source to see if any of this was true. If you find that the I.R.S. is in fact reviewing your account for some reason, then you may wish to speak with a tax attorney regarding how to best respond to the I.R.S.'s inquiries, and what documentation or information would be pertinent for defending yourself against any claims.... Read Answer

Without further detail as to the amounts involved, the range of the unsupported withholding exemptions claim and the amounts involved, it is very difficult to give you concrete answers. Generally, it has to be a tax protest scheme, something fairly outrageous, for the IRS to consider referral for prosecution. $2,000.00 does not sound like it would rise to the level of criminal prosecution. The grounds for denial of discharge in bankruptcy do make reference to taxes but since these liabilities are older, income tax liability is generally not exempt from discharge after being 3 years old or older. I am not sure why you think that your potential liability would be a basis for keeping you from leaving the country unless you think that you would be incarcerated for non-payment of the $2,000.00 in taxes that you indicate you owe. That would seem to be unlikely since the cost of prosecution and jailing you, even as an example, would outweigh the benefit of making you an example.... Read Answer

I'll assume that the issue of who can claim the child is not addressed in your divorce/separation agreement. That being the case, the parent who resided with the child for more than half the year would be entitled to claim the child. If the child spent more days with her than with you during the year, she is entitled to claim the child.... Read Answer

My advice would be to contact a different CPA and get them to complete your 2008 taxes. Your number one priority is to get your returns filed with the I.R.S. as soon as possible. If the notice you received from the I.R.S. simply indicated the amount owed, and gave you a date by which to pay that amount, you shouldn't worry too much. These types of notices are sent for quite some time, and aside from accumulating additional interest on the amount owed once past that due date, there are no real consequences to not paying that debt. The I.R.S. will not be able to collect from you unless they have sent out a letter entitled "Final Notice of Intent to Levy," or "Final Notice Before Seizure." The notices that you are receiving now, while important, are probably not final notices prior to collection action. However, just insure that they do not indicate that they are final notices, and keep an eye out for any type of notice that says it's a final notice. Once your return is filed, the assessment that the I.R.S. has calculated should change. Often the I.R.S. files a substitute return on your behalf, and these returns show an exaggerated amount owed due to the I.R.S.'s practice of not including various deductions, credits, and exemptions that you would normally claim. Again, your first step is to get this return as filed as soon as possible. Once that is complete, you will need to contact your previous accountant to discuss having your fees reduced or refunded due to their inability to complete the task for which they were paid.... Read Answer

If these returns have already been filed with the I.R.S., then you can order a copy of your return transcript by calling the I.R.S. at 1-800-908-9946. Although your transcript will not be a photocopy of your actual return, it will show all of the information that was included on your 2010 return. If your returns have not been filed, then I would suggest continuing to attempt to contact your accountant in order to get them. If she still does not return your calls, then you will need to make a written demand to her; do this before pursuing any other recourse. If, after a written demand, she has still not given you what you have requested, you may want to report her actions to the Better Business Bureau, a local Accountancy Board, and the I.R.S. You can report abusive tax preparers and suspected tax fraud to the I.R.S. on Form 3949-A, or by sending a letter to: Internal Revenue Service, Fresno, CA 93888.... Read Answer

If there is a divorce decree which indicates that the father is to claim the child for tax purposes, then you can not claim the child on your tax return. To do so would be in violation of a court order, and could cause you to be found in contempt if it were ever brought to the attention of the court. If you wish to claim your son on your tax return, then you will need to petition the court to have the order changed. Having the father agree to this will be helpful, but even if he does, it will ultimately be up to the judge as to whether your proposed changes to the order are warranted.... Read Answer

In order to be able to claim your child as a dependent for tax purposes, you must provide half or more of their financial support, and they must live with you for half or more of the year. There is no way for two people filing two separate returns to claim the same child as a dependent; only one person can claim that child as a dependent. The only way for both of you to claim one child as a dependent is if you were filing a joint return as a married couple.... Read Answer

The Department of Revenue is required to send a Final Notice Before Seizure before they take any collection actions for a past due tax debt. You may want to check with the Department to insure that they have your address correct, as they may have been sending correspondence to an old address. As far as the statute of limitations, they have 10 years from the date of assessment to collect the tax. Thus, the tax years in question are irrelevant, as it's the date of assessment that determines the statute of limitations. If they assessed you at later dates than the I.R.S. did, then it may be possible that the statute of limitations has not expired for your state tax debts.... Read Answer

Go to www.irs.gov. In the upper right corner there is a search box. Type in "check on refund". That will take you to an online tool to check on your refund. If you are entitled to the refund, the IRS will pay it or, if the tax return has information that creates issues as to allowance of the refund, the IRS will ask for further information. If you are talking about a timely filed 2011 return, you are still within the period where a return could be in the process. This is a good tool! In my opinion, not making an inquiry will not enhance the likelihood that the refund will be paid.... Read Answer