Saturday, September 27, 2008

IRS Help – Enrolled Agents – Part II

If you have a tax problem with the IRS and need the help of a tax professional you want someone truly qualified to give you the best help possible. You need an Enrolled Agent. An Enrolled Agent (EA) is a federally authorized tax practitioner with highly specialized technical expertise in tax matters and is qualified to represent taxpayers before all administrative levels of the Internal Revenue Service including audits, collections and appeals.

The Enrolled “Agent” is authorized to appear before the IRS on behalf of the taxpayer. Only Enrolled Agents, CPAs and attorneys are authorized to represent taxpayers before the IRS. Enrolled Agents are true tax specialists and probably represents a taxpayer’s best option for representation before the IRS due to their level of experience and knowledge. Part I of this two-part series mentioned the importance of hiring a tax resolution firm that employs Enrolled Agents. Some firms employ former IRS agents who are also Enrolled Agents. This is perhaps the most formidable combination of skill, experience and expertise when resolving a tax matter. There are a few firms that have this combination.

Getting into a plan of resolution is the most important thing a taxpayer needs to do if they owe the IRS money. An IRS tax debt doubles every 4 years. If this is not addressed quickly the taxpayer’s financial condition will eventually dissolve into financial ruin. An excellent tax resolution firm understands this and strives to bring the best plan of resolution possible to the taxpayer through the skill and expertise of their Enrolled Agents. If you have a tax problem don’t stall, make a call! Call a tax professional today!

IRS Tax Help

Do you have a problem with the IRS and need tax relief or some other type of tax help? Your best bet is to call a professional tax resolution firm. Some things to consider when selecting someone to represent you would be a firm capable of representing you in every aspect of tax matters. Another point of consideration would be whether or not the company is a member of the Better Business Bureau, and if so what is their rating? Additionally you want a company that truly seeks to understand your specific tax problem. Without knowing the client’s position it is impossible to accurately determine how to solve the client’s problem.

Once the problem(s) have been accurately identified a plan of resolution must be formulated to resolve the problem(s). Some of the typical problems clients have result from years of unfiled tax returns and/or a large tax liability (they owe a lot of money to the IRS). If a client has unfiled returns the tax resolution firm you select must be able to act quickly to get these returns completed and filed. If the client owes the IRS money and is unable to pay then a plan of resolution needs to be developed and then implemented. One of the most qualified persons to do complete this task is a type of specialist known as an Enrolled Agent (see part II for information about Enrolled Agents).

Tax problems are complex, unique to the client’s own personal circumstance, and require highly specialized skills to get the problem resolved. The team you select to help you with your situation should consist of Enrolled Agents who will use their collective skills and abilities as well as their knowledge and experience in working with the IRS to get the taxpayer into the absolute best plan of resolution available. There are firms that offer clients a no cost, no obligation consultation to determine whether or not the client could benefit substantially from their services. Be careful who you use to help you. It will make all the difference in the end.

Friday, September 26, 2008

Unfiled Tax Returns

Are you “unfiled” with the IRS? If so, then you may have a problem. The IRS laws classify an unfiled tax return a misdemeanor. An unfiled taxpayer may be sentenced to up to one year in prison for each year they are unfiled. Needless to say unfiled tax returns can be a serious problem. Consider the case of actor Wesley Snipes and what happened to him for unfiled tax returns.

Filing unfiled returns will get a delinquent taxpayer back in good standing with the IRS. However, when filing you want to make sure the returns are filed correctly. If there are several years that need filing a taxpayer should seriously enlisting the services of a professional tax preparer. You want the returns filled out correctly and accurately.

Filling out the returns correctly depends on the preparer’s access to tax preparation software that matches up with the year(s) being prepared. Tax laws change from year to year and it is very important to select a tax preparer that had the correct tax preparation software. Failure in this area can trigger an audit!

Filling out the tax returns accurately depends on the diligence of the tax preparer to conduct the proper research to get all the facts necessary to completing the returns. This research should include 1) working directly with the taxpayer to get all expenses that can be written off and to 2) interview the IRS for the purpose of analyzing the taxpayer’s IRS transcript and to obtain a copy of the IRS Income and Wage report to ascertain exactly what income records the IRS has on the taxpayer.

All combined these factors should enable a tax preparer to correctly and accurately prepare the taxpayers outstanding returns. By making sure the returns are filled out according to the tax laws pertaining to each year requiring filing and matching up the proper income obtained from the Income and Wage report the taxpayer can be confident that they are virtually “audit proof” with their returns.

IRS Letter – Certified Mail

You just received a certified letter from the IRS and you’ve opened it and read it and you’re wondering what the letter is all about and what you need to do. First, read and understand the letter and second, take action on the letter! Letters from the IRS have codes identifying what the letter is about. Usually certified mail from the IRS is either a CP 504 or an L1058. These letters are described below.

CP 504 – Initial Notice of Intent to Levy
This is the first collection oriented letter you will receive certified from the IRS. It is an initial notice of intent to levy your wages and/or bank accounts. This is the first warning shot the IRS is firing at the taxpayer.

L1058 – Final Notice of Intent to Levy
This letter is what it says…a FINAL NOTICE of intent to levy. The taxpayer has 30 days to respond to this letter. If no response if given the IRS can levy (garnish) your wages and/or bank accounts. This is serious!

It is best to be proactive if you receive either of these letters. A professional tax resolution firm can be very helpful with situations like these. The first step a tax professional will take will be to file a Power of Attorney on behalf of the taxpayer and request a stay on any collection activity the IRS may have in the works. The bottom line is this…get help immediately! Call a tax professional!

IRS Letter

You’ve got mail! We’re not talking about a friendly email you have received from a friend. We’re talking about mail from the IRS that arrives at your home by certified mail. If you have received this type of mail from the IRS DO NOT IGNORE IT! Open it immediately and respond! Whenever the IRS sends certified mail to someone they are trying to get their attention to let them know they are getting ready to take specific action against them. A response is needed.

If you have received such a letter your best bet is to contact a tax professional to help you with your problem. The chances are very good you are about to get your wages and/or your bank account levied (forcefully taken by the federal government). The IRS is serious about collecting from you. Fortunately there are options available to help with this and calling the IRS yourself is NOT the right answer (the letters will suggest you call the IRS)! The best bet is to contact a tax resolution firm who employs former IRS agents who know how to apply the tax laws to YOUR benefit and NOT to the benefit of the IRS. Your problems can be resolved, but it’s up to you. Take action NOW if you have received one of these letters. Get help now!

Friday, September 19, 2008

Tax Attorneys

Do I need a tax attorney? This is a common question I am asked of taxpayers whenever they have a serious problem with the IRS. First of all, any problem with the IRS is a serious problem. As a tax consultant my question back to the client is, “It depends.” It depends on the type of action the IRS is taking against the taxpayer. For the most part a taxpayer should consult a tax attorney to help them avoid having a problem with the IRS. However, if the taxpayer has not taken the proper steps to protect them from the IRS and they now find themselves in a situation where they owe the IRS money, a tax attorney is generally not the best option.

If the issue is unfiled tax returns and/or an unpaid tax liability these types of problems can be handled by a tax advisor skilled in tax resolution. A tax attorney would be needed if the taxpayer was under some type of formal indictment by the Criminal Investigation Division of the IRS and needed legal representation. A tax advisor skilled in tax resolution who knows the rules regarding tax resolution should be able to work out a plan of resolution with the IRS on behalf of the taxpayer. Most delinquent taxpayers are unaware of all the options available to them thru the tax code.

Current tax law provides for 21 methods of resolving an outstanding liability with the IRS. The challenge for most people have is knowing all of the laws. This is why the services of a tax professional is a must. Tax attorneys are great at what do. So are tax consultants. Know your options! Call a tax consultant today!

IRS Tax Penalties

When you owe money to the IRS they will charge you interest and penalties on the money you owe. By law the IRS must charge interest on your tax debt. Penalties, however, is another story. Penalties can be abated under certain circumstances. The IRS will conduct a thorough review of every fact surrounding the circumstances of your situation before abating any penalties.

In general, the IRS will consider one or a combination of the following reasons for penalty abatement:

Medical condition
Reliance on a tax professional
An act of God
Loss or theft of records
Victim of a crime

Before granting penalty abatement the IRS will conduct a “reasonable cause interview” whereby they will ask for detailed documentation supporting the reason for the causes listed above. The IRS will request a detailed chronology of events for these occurrences. A comprehensive review of what they will look for is listed below.

Medical condition – documentation including medical notes from physicians, medical bills, other financial bills, disability claims, lack of income or employment, etc.

Reliance on a tax professional – proper documentation would include law suits filed against the professional, documentation of dismissal of the tax professional with an analysis of the reason for dismissal, etc.

An act of God – any documentation proving a hardship related to a flood, hurricane, tsunami, tornado, fire or anything else that could be classified as an act of God. Insurance claims and proof of property loss would be required.

Loss or theft of records – police reports or documentation of dismissal of employees relating to the documents lost or stolen by an employee, etc.

Victim of a crime – evidence of embezzlement or other type of theft supported by police reports, insurance claims, etc.

There are a host of other questions the IRS will ask in their consideration of granting a penalty abatement. If you have a large tax liability and have experienced one or more of the items mentioned above the chances are good that you may qualify for penalty abatement. As a tax consultant I always seek ways to help clients benefit from penalty abatement. If you think you may qualify for penalty abatement call a tax professional. It is worth the call!

Making A Difference

I am a tax consultant and I work with people every day who have considerable tax problems. Their problems range from owing the IRS a relatively small sum of money all the way to owing a very large sum of money with years of unfiled taxes. Most of the individuals I speak with are very concerned about their situation with the IRS. They want to know what can be done to solve their problem.

The thing I like most about my job as a tax consultant is making a difference in people’s lives. The tax laws are complicated and confusing. To make matters worse there are tax resolution firms that advertise settling your tax debt for “pennies on the dollar,” which is a legitimate plan of resolution but is rarely accepted by the IRS. Such advertisements lead to further confusion.

A competent tax consultant will ask very specific questions in order to get to the heart of the matter, will not be judgmental and will tell the client the truth of their situation and will provide accurate advice as the absolute best course of action that must be taken to effectively resolve the client’s situation. If you have a tax concern and are needing honest answers to your deepest concerns call a tax professional. Listen to what they say and then make the determination whether they are concerned about you and your situation or selling you just any old service. This is the litmus test. Choose your tax consultant wisely! You want a tax consultant who is concerned about your and truly making a difference in your life for the better.

Friday, September 12, 2008

CP 523

Are you in an installment agreement with the IRS and have you received form CP 523 from the IRS by certified mail? If so, then this means your installment agreement has gone into default. This creates a significant problem for tax payers due to the fact that the taxpayer is now back in the collection process and will be pursued aggressively by the IRS once again.

Once the IRS issues you a CP 523 you have a short window of time to get this corrected. Usually the only way to fix the problem is to hire a professional who has experience working with the IRS. The best type of tax resolution firm to contact is one who employs former IRS agents. A former IRS agent should have the necessary experience and skill to successfully negotiate a new agreement for you.

The Effects Of A Garnishment

You just received notification from the IRS and your employer you are about to have your wages garnished and you’re wondering what effect this is going to have on your income. IRS Publication 1494 provides a comprehensive breakdown of what to expect based on your filing status and the number of exemptions you claim.

The IRS will garnish your wages if you owe them money and you do not respond to their request for payment. First, the IRS will send you notification of their intent to levy (garnish) your wages. If you disregard these notifications you open wide the door for the IRS to garnish your wages. If this happens you will need to enlist the services of a tax professional to get this levy lifted. If you get a notice of intent to levy (garnish) you need to take action immediately. Call for help now!

Qualifying Child

Can I claim my child on my tax return? This question comes up frequently with taxpayers. The taxpayer’s child must pass the four “qualifying child” tests. These four tests are related to relationship, residence, age and support. There are also rules that need to be followed in the child is claimed by two or more taxpayers in a given year.

This is one area that causes taxpayers significant tax problems. If you claim a child on your tax return and the child does not qualify you may have a tax problem due to the fact the IRS will disallow this benefit. The problem gets worse if this goes on for a number of years and is discovered after many years of filing. If you have a tax problem due to this and are wondering what your options are you should consult a tax professional.

Friday, September 5, 2008

Unfiled Tax Returns - Am I In Trouble?

You have not filed a tax return or two or three or maybe even more and you’re wondering if you’re in trouble with the IRS because you haven’t heard anything from them. The answer is YES! You are in trouble. Don’t get a false sense of security just because you have not heard from the IRS. They’ve got your number (and your numbers!). The IRS maintains a file on every taxpayer. They have a record of all income you have earned from all sources.

It is not unusual for a taxpayer to go for a period of time with unfiled returns and not hear from the IRS. This does not mean the IRS has forgotten about you. They have not. At some point in time the IRS will send the taxpayer an SFR which stands for Substitute For Return. When they prepare the SFR they will prepare it in such a way as to apply the maximum tax and will include all penalties and interest. Then they will seek collection. It is at this point that you, the taxpayer, will need professional tax help.

On a more important note it is important to recognize that the IRS considers non-filing to be a criminal offense. The IRS always reserves the right to pursue prosecution by referring cases of non-filing to the Criminal Investigation Division of the IRS. Don’t let this happen to you! If you’re unfiled get your tax returns filed quickly and accurately!

Pennies On The Dollar Tax Settlement

You owe the IRS a large sum of money and you want to settle your tax debt for “pennies on the dollar.” The Offer In Compromise is the key to your problem. This is a program offered by the IRS whereby you can offer the IRS LESS than what you actually owe to settle your entire tax debt. You must qualify financially for the program, however.

The program is complex requires a high degree of sophistication to effectively calculate your offer amount and structure your offer. This is best handled by someone with considerable experience in this particular method of tax resolution. You can do it yourself but if you do you may be putting yourself at great risk.

If you choose to “go it alone” there are some things you should consider. You may offer the IRS too much! This may put you in a position that you cannot afford which would ultimately jeopardize your agreement. Or you may offer too little in which case the IRS will consider your case a frivolous offer and reject it. If your offer is denied on this basis the IRS may construe your frivolous offer as an attempt to delay or obstruct the collection process and may turn your case over to the Criminal Investigation Division of the IRS for criminal investigation. Don’t chance it! Hire a professional! At the very least obtain some degree of professional tax consultation. Good luck!

Thursday, September 4, 2008

Help! I'm Getting Levied!

Help! I’m Getting Levied!

If you get a notice that you are going to be levied by the IRS you need to get help immediately! When the IRS notifies you are getting levied you need to take action to stop this process ASAP! The IRS has the authority (and the power) to have your employer send a significant portion of your pay check directly to the IRS as payment toward your IRS debt. The amount the IRS can take varies depending on your filing status.

You will know if you are getting levied because the IRS will send you a notification in the mail. The notification you will receive will be either a “CP504 – Urgent!! We intend to levy on certain assets. Please respond NOW” or an “L1058 - CALL IMMEDIATELY TO PREVENT PROPERTY LOSS – FINAL NOTICE TO INTENT TO LEVY AND NOTICE OF YOUR RIGHT TO A HEARING” These notices are your last chance to take action. If you receive either of these notifications you need to call a professional tax resolution specialist.