Joseph Pearman, Attorney at LawJoseph Pearman, Attorney at Law2026-11-09T00:22:05Zhttps://www.josephpearman.com/feed/atom/WordPress/wp-content/uploads/sites/1103754/2024/04/cropped-Joseph_Pearman-site-icon-32x32.pngOn Behalf of Joseph Pearman, Attorney at Law<![CDATA[When can a taxpayer get “one-time forgiveness” from the IRS?]]>https://www.josephpearman.com/?p=478762026-11-09T00:22:05Z2026-11-09T00:22:05ZThe FTA program
The IRS has a program called First-Time Penalty Abatement (FTA). It’s often referred to as “one-time forgiveness.” It lets people who have previously paid their taxes as required to pay their overdue taxes without having to pay three key penalties for failing to file, pay and deposit. The failure-to-file penalty can be particularly steep – going up to 25% of the unpaid balance if multiple months go by.
The unpaid balance is still due, along with any interest that accrues. By not being charged these penalties, however, taxpayers can more easily get caught up on what they owe.
To qualify for the FTA program, a taxpayer must meet the following requirements:
They must have filed their previous tax returns on time or received an extension.
They cannot have had an outstanding balance from any prior years unless they have a payment plan approved by the IRS.
They cannot have had penalties for the three years prior to the year for which their taxes are due.
A taxpayer who doesn’t meet these requirements may still be able to get the penalties removed for “reasonable cause.” This can include things like a natural disaster in their area (for example, a destructive tornado or flood) or a serious illness that prevented them from filing their taxes on time.
As noted, tax debt doesn’t just magically disappear. Although it may seem like the IRS is a mammoth bureaucratic entity, tax debt doesn’t just get lost or forgotten about. Whatever the circumstances, it’s smart for taxpayers who are notified that they owe the IRS money to get experienced legal guidance as early as possible accordingly.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[How to keep an IRS tax lien from progressing to a levy]]>https://www.josephpearman.com/?p=478742026-10-25T14:10:44Z2026-10-25T14:10:44ZOptions for dealing with an IRS lien
The best way for a taxpayer to get rid of a lien and keep it from turning into a levy and a seizure of their property is to pay their debt. Of course, not everyone has or can come up with the funds necessary to pay what they owe the IRS. There are other options that may be possible. These include:
Certificate of Discharge: If a person qualifies for a discharge (based on IRS requirements), a lien can be removed from a specific property, with the proceeds going to the IRS.
Certificate of Subordination: The IRS will sometimes “subordinate” their claim on a property to other creditors if it means there’s a better chance the debt will be paid – for example by obtaining or refinancing a mortgage.
If a taxpayer doesn’t attempt to or isn’t successful at getting a lien released, there are a number of additional steps before the IRS can proceed to a levy. These include a Final Notice of Intent to Levy.
The sooner a taxpayer deals with IRS notification of unpaid taxes – whether they believe the notices are accurate or not – the better their chances are of avoiding, liens, levies and other consequences. Getting early and experienced legal guidance can make all the difference.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[Are tax relief business beneficial for those who owe the IRS?]]>https://www.josephpearman.com/?p=478722026-10-19T16:10:51Z2026-10-19T16:10:51ZHow these businesses work
Many (but not all) of these tax settlement businesses are legitimate. Even the legitimate ones can charge a flat or hourly fee or take a percentage of the amount owed for their services. They should be honest with prospective clients about whether they can provide any meaningful help to them
They don’t get some kind of unique deal from the IRS. Often, they seek an offer in compromise (OIC), which is an IRS process that can take months. An OIC isn’t always accepted. The IRS will review required documentation from the taxpayer of their assets and liabilities and extenuating circumstances like inability to work to determine their ability to pay.
The bottom line is that these businesses still have to follow IRS procedures and rules, and most taxpayers don’t get a significant reduction in their tax debt unless there have been errors, fraud by a spouse filing jointly or there are simply no assets to take.
A more reliable alternative
Rather than having to worry about whether a tax settlement business is legitimate, the people assigned to a case are experienced and the amount charged is worth the money saved, the website Investopedia advises, “a qualified tax attorney is probably a safer bet.”
An experienced legal representative can explore all options for resolving a tax dispute or debt and work to minimize costly and unnecessary penalties and consequences.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[Taxpayers can now deduct donations even when they don’t itemize]]>https://www.josephpearman.com/?p=478702026-10-02T19:12:39Z2026-10-02T19:12:39ZMany Americans spend hours every year during tax season adding up their various deductions, including charitable donations, only to find that they actually owe less (or get a larger refund) if they take the standardized tax deduction than if they itemized their deductions.
Starting with the 2026 tax year, taxpayers can take the standard deduction and also deduct one charitable deduction. The change is a result of the “One Big Beautiful Bill” signed into law last year that makes a number of changes to tax regulations.
An “above-the-line” deduction
This particular change allows taxpayers to deduct up to $1,000 in cash donations to qualifying charitable organizations for those with a single filing status and up to $2,000 for married couples who file jointly, even if they don’t itemize their deductions. It is considered a “permanent” change in that there’s no sunset clause for it.This change can help encourage more lower- and middle-income taxpayers to make charitable donations and see some tax benefit even if they don’t need to itemize their deductions. It doesn’t include contributions to a donor-advised fund (DAF). However, it covers the type of cash donations that most people make to charitable organizations.
Other changes from the sweeping new tax law
Starting this year, the income thresholds have also risen for being able to use the standard deduction. For example, they are $16,100 for single filers and $32,200 for married couples filing jointly.Another change this year related to tax donations pertains to those with higher incomes. There’s a new “floor” of 0.5% of adjusted gross income (AGI) for deductible tax donations. That means, for example, that if someone’s AGI was $500,000, the first 0.5% or $2,500 of their cash donations wouldn’t be deductible if itemized. Of course, high-income filers who make significant charitable donations can find other ways to get the most tax benefit from those deductions.When control of the executive and legislative branches of the federal government changes hands – particularly from one political party to another - changes to tax law often follow. Having sound professional guidance can help taxpayers keep up with these changes, use them to their benefit when possible and avoid unnecessary issues with federal and state tax authorities.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[A tax mistake is not tax fraud]]>https://www.josephpearman.com/?p=478672026-09-19T00:27:37Z2026-09-19T00:27:37ZThe concern many people feel over tax mistakes is rooted in the fact that they believe there will be severe ramifications if they make an error. They are worried that the government will accuse them of fraud or committing a crime. This is especially true for small business owners, who often have far more complex tax returns than individuals.
But the important thing to remember is that tax fraud is a willful or intentional action taken to defraud the government. This is much different than a genuine and accidental mistake made on your taxes. While tax mistakes can lead to fines and financial penalties, they are not criminal events and they do not qualify as tax fraud.
A misunderstanding of tax laws
For example, someone may have a genuine misunderstanding of the tax laws. This leads to an error on the paperwork, where they inadvertently make false statements about their income or tax liabilities. They are not intentionally trying to get out of paying taxes, but simply did not understand what they were required to report.
Accidentally leaving out certain income
Another issue could be leaving out a source of income. Perhaps a business owner has dozens or even hundreds of various clients, so their income is very complex. They hire a CPA to handle their taxes, but they accidentally forget to provide paperwork for a few different sources of income, which then go unreported. They may need to rectify the mistake and pay the taxes that are due, but they have not intentionally committed fraud.Navigating tax errors and disputes can be complicated, so it is important for those involved to understand what legal steps to take.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[When can cryptocurrency investment lead to tax controversies?]]>https://www.josephpearman.com/?p=478642026-09-07T11:26:12Z2026-09-07T11:26:12ZCryptocurrency reporting is mandatory
The Internal Revenue Service (IRS) definitely monitors what people do with their money and the strategies people popularize for avoiding income tax obligations. The IRS has been aware of cryptocurrency as a common investment for many years, and there is formal policy in place regarding the need to report cryptocurrency holdings. More importantly, people must report the capital gains obtained when selling cryptocurrency.
While there may not be a centralized bank that retains records of all cryptocurrency holdings and transactions, trading platforms and other financial institutions must make disclosures to the IRS. As such, those who fail to report their holdings and profits derived from sales could be at risk of underpaying their taxes, triggering an audit or even facing significant financial penalties.
Those facing an audit or concerned about an IRS letter they’ve recently received regarding how they’ve reported their assets and earnings may need legal guidance to protect themselves. Working with an attorney after receiving an IRS letter related to undisclosed cryptocurrency investments or profits can help people minimize the consequences of an income tax controversy.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[High earners are now at lower risk of IRS audits]]>https://www.josephpearman.com/?p=478622026-08-15T20:40:16Z2026-08-15T20:40:16ZHigh-income audit rates are down
When looking at the tax controversies that lead to IRS audits, it is possible to identify trends in audits that can give insight into the enforcement priorities of the IRS. Currently, high earners are at relatively low risk of an audit.
Data from the IRS shows that audits of those who make more than $5 million dropped by 66% between 2010 and 2019, and the trend does not seem to have changed. Of course, audits do still occur, even if the risk is lower. Discrepancies in paperwork, undisclosed income and the misuse of tax rules can all trigger a broader audit in addition to a notice of unpaid taxes.
Those facing a federal income tax controversy generally need guidance to understand if a mistake occurred and evaluate their options for resolving the problem at issue. Retaining legal guidance when facing an audit is often the best option available and can help people understand not only why the IRS chose to audit them but also their rights throughout the audit process.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[When both co-parents claim dependent child tax deductions]]>https://www.josephpearman.com/?p=478472026-08-09T18:09:56Z2026-08-09T18:09:56ZDivorce and child custody disputes sometimes concern tax-related matters. For example, when one parent claims a child as a dependent despite a custody order or divorce decree stating that the other parent is entitled to do so, challenges can arise.
The IRS has its own rules for determining who may claim dependent-related tax benefits. These rules may or may not reflect the realities of a particular custody or divorce decree order. As a result, these cases are not always as straightforward as one might initially assume.
What happens next? The IRS will be involved
If both parents claim the same child on separate tax returns, the IRS will typically identify the duplicate claim during processing. This may delay one or both returns while the agency requests additional information or documentation. In some cases, the IRS may send notices asking each parent to substantiate their eligibility for the dependency-related tax benefits they’ve claimed.The IRS is not responsible for enforcing state court custody orders. Instead, the agency generally applies federal tax law to determine which parent is entitled to claim the child at issue. Depending on the circumstances, that analysis may involve residency requirements, the amount of time the child lived with each parent, whether a valid release of the dependency exemption or related tax benefits was executed when required, and other applicable federal rules.If the IRS determines that a parent improperly claimed the child, it may disallow the claimed tax benefits. The parent may be required to repay any resulting tax savings, along with applicable interest and, in some situations, penalties. The dispute may also result in consequences in family court if the claim violated the terms of a custody order or divorce agreement.Whether a parent is being accused of claim-related misconduct or needs to enforce the terms of a court order in their tax-related favor, seeking personalized legal guidance can facilitate a fair resolution to what may be a contentious and consequential concern.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[How an Offer in Compromise may resolve tax controversies]]>https://www.josephpearman.com/?p=478422026-07-28T07:04:53Z2026-07-28T06:48:45ZTax debt can create uncertainty that affects your finances and your peace of mind. If you owe more than you can realistically pay, you might wonder if the Internal Revenue Service (IRS) offers any way to settle the debt. An Offer in Compromise could provide that opportunity for some taxpayers. Still, the program follows strict rules and approval is never guaranteed. Learning how an IRS Offer in Compromise works may help you decide if it fits your situation and what role it could play in resolving a tax controversy.
What is an Offer in Compromise?
An Offer in Compromise is a program that may allow you to settle your tax debt for less than the full amount you owe. The IRS reviews your financial situation before deciding if it will accept your offer. Your income, expenses, assets and ability to pay all play a role in that decision.It also helps to know what an Offer in Compromise does not do. It does not erase tax debt automatically or forgive taxes simply because paying them feels difficult. You must qualify under IRS standards and continue meeting your future tax filing and payment obligations if the IRS accepts your offer.
How could an Offer in Compromise resolve a tax controversy?
Once the IRS accepts your Offer in Compromise and you satisfy its terms, the tax debt covered by the agreement generally reaches a final resolution. That outcome may stop collection efforts related to that liability and give you a structured path toward compliance.An accepted offer could help you:
Settle eligible tax debt for less than the full balance.
Resolve the specific tax liability covered by the agreement.
Create a clear plan for meeting future tax obligations.
An Offer in Compromise may not resolve every tax controversy. For example, an ongoing audit or another dispute with the IRS could continue unless it receives a separate resolution.The IRS administers the Offer in Compromise program which authorizes the agency to compromise certain tax liabilities when legal requirements support that result.
When might an Offer in Compromise make sense?
Several financial situations may lead taxpayers to explore tax debt settlement through an Offer in Compromise. The program often serves people whose financial circumstances make full payment unrealistic.Common examples include:
Carrying large tax balances that exceed your ability to pay.
Facing IRS collection actions, such as tax liens or levies.
Experiencing reduced income or long-term financial hardship.
Each application receives an individual review, so similar financial situations may produce different outcomes.
A possible path toward financial resolution
An IRS Offer in Compromise may provide an opportunity to resolve certain tax debts and reduce the uncertainty that often comes with collection activity. Still, the program requires careful preparation and strict compliance with IRS requirements. Getting legal advice, reviewing your financial circumstances and the program's eligibility rules may help you determine if this option deserves further consideration for your tax situation.]]>On Behalf of Joseph Pearman, Attorney at Law<![CDATA[What is a theft-loss tax deduction?]]>https://www.josephpearman.com/?p=478402026-07-23T15:42:32Z2026-07-23T15:42:32ZA theft-loss tax deduction allows certain taxpayers to deduct qualifying financial losses caused by theft or fraud. For better and worse, the rules related to this particular deduction are far more complex than many people realize.
Whether a loss qualifies depends on the facts of the situation, the Internal Revenue Code and current IRS guidance. As a result, individuals who have suffered significant financial losses due to another’s theft or attempt to defraud them should not assume they either qualify or are automatically excluded from claiming this kind of deduction without careful review and legal support.
The basics of theft-loss deductions
Recent IRS guidance issued in 2025 clarified that some victims of sophisticated financial scams may be eligible to claim theft-loss deductions. This includes certain investment-related fraud schemes, such as so-called "pig butchering" scams, in which criminals persuade victims to invest money through fraudulent platforms while falsely promising substantial returns. Because these transactions were entered into with the expectation of making a profit, the IRS has recognized that some losses may qualify for favorable tax treatment.The outcome is different for victims of romance scams. Although the financial harm caused by this kind of scam can be just as devastating, the IRS has generally concluded that these losses do not qualify for the same deduction because the victim's primary motivation was to establish or maintain a personal relationship rather than to earn income or make investment gains.This distinction has generated considerable discussion among taxpayers and tax professionals. Two individuals may lose significant funds to equally sophisticated fraud operations, yet receive different tax treatment based largely on the reason they were persuaded to transfer their funds. One person's expectation of financial return may support a deduction, while another person's reliance on emotional trust may not.Determining whether a theft-loss deduction is available requires careful analysis of the underlying facts, applicable tax law and supporting documentation. Every situation is unique, and seemingly minor details may significantly affect the outcome, which is one of the many reasons why it is generally wise for fraud victims to seek legal guidance when navigating their tax obligations. ]]>