Friday, March 27, 2009

Can I Get My IRS Penalties Abated?

As a professional tax resolution specialist a very frequent question I hear is, “Can I get my IRS penalties abated?” And the answer is always the same which is, “It depends.” It depends on the individual circumstances of each person who owes taxes and also owes penalties. In order for the IRS to remove penalties they have to have a very good reason. The IRS applies penalties to give taxpayers an incentive to pay their taxes on time.

There are instances where taxpayers truly have very good reasons to have their penalties abated. The key to getting the penalties is to 1) know what the rules are regarding penalty abatement, 2) properly documenting the reasons that lead to the penalties and finally 3) presenting your case to the IRS and requesting they abate (remove) the penalties. Often times a tax professional is the most qualified person to handle this procedure and a taxpayer would do well to consider this option.

The qualifications for penalty abatement are stringent and can be hard to document but can be well worth the effort. Recently the IRS implemented a first time penalty abatement program to help taxpayers who have gotten into trouble with the IRS for the first time. Again a tax professional can be very helpful in this area.

I Have A Federal Tax Lien

You have just come home from a hard day of work and you see that the mailman has left a yellow slip of paper in your mailbox. You look at it and notice the IRS is trying to notify you about something. You go to your local post office and pick up a certified letter from the IRS and open it. As you read thru the letter you discover to your horror that the IRS has filed a federal tax lien against you! What do you do?

If you’re like most people you feel a shock wave of fear and confusion shoot thru your body and your anxiety level goes way up and all for good reason because this is a very serious matter. A federal tax lien will have a serious affect on your credit as well as your ability to obtain any type of loan or other financing. It may hinder your ability to get hired. You need this corrected and you need it corrected now! What should you do?

Perhaps the best course of action would be to contact a professional tax resolution firm and interview them as to what can be done to resolve a federal tax lien. If you have received a federal tax lien then the chances are very good that there’s more going on with your IRS file than meets the eye. In most cases what is needed is a thorough review of your IRS file to find out what’s going on and why. The possibilities are many and it does require the services of a tax professional.

In the vast majority of instances a federal tax lien can be removed only when the tax liability is paid in full. The most important thing however is to obtain professional help due to the fact that if the IRS has filed a federal tax lien against you then the possibility exists that you are subject to further IRS collection proceedings which could include the IRS levying your bank accounts and/or your wages. If you have a federal tax lien take action immediately.

Friday, March 20, 2009

How Far Back Can The IRS Collect?

You did not file a tax return many years ago and you’re wondering how far back the IRS can go to collect. If you have filed all of your returns then usually the IRS will only look back 7 years. If you do not file a return then the IRS can go as far back as when the return was initially due. The important issue here is to make sure you file your returns. It is the IRS non-filer who has the most to fear.

Whenever a taxpayer has outstanding returns (unfiled returns) there is no limit to when the IRS can come after you. What will happen is that the IRS will file a few returns for the taxpayer, add interest and penalties and will then bill the taxpayer for the full amount. This will get the taxpayer’s attention. If this happens and you feel you are getting squeezed by the IRS your best bet is to call for professional tax help. This can save you a lot of money and heartache.

Audited! How Long Does The IRS Have?

Are you concerned about getting audited by the IRS? From time to time people ask me, “How long does the IRS have to audit a taxpayer?” Generally the rule is that the IRS can audit a taxpayer going back 3 years and that’s it. If the IRS determines that a taxpayer has underreported their income by more than 25% for a given year then they can go back 6 years.

Getting audited by the IRS is a serious proposition and should not be taken lightly. The IRS conducts two types of audits, a correspondent audit and a field audit. A corresponded audit is when the IRS corresponds with the taxpayer via the US mail. A field audit is when someone with the IRS comes and visits with the taxpayer in person.

If you are notified you are going to be audited you need to get professional representation to make sure the auditor does not have free reign to ask whatever they want to. Audits need to be guided and managed. Failure to adhere to this advice is an invitation to trouble. Don’t take a chance. Call a true tax professional.

Wednesday, March 11, 2009

IRS Certified Mail - CP 504

Have you received certified mail from the IRS and are wondering what it’s for? The chances are very good they are sending you an IRS Notice CP 504 stating the following:

We intend to levy on certain assets. Please respond NOW.
Our records indicate that you haven't paid the amount you owe. The law requires that you pay your tax at the time you file your return. This is your notice, as required by Internal Revenue Code Section 6331(d), of our intent to levy (take) any state tax refunds that you may be entitled to if we don't receive your payment in full. In addition, we will begin to search for other assets we may levy. We can also file a Notice of Federal Tax Lien, if we haven't already done so. To prevent collection action, please pay the current balance now. If you've already paid, can't pay, or have arranged for an installment agreement, it is important that you call us immediately at the telephone number show below.

Taxpayers want to know the answers to the following questions once they receive a CP 504:
What is the notice telling me?
What do I have to do?
How much time do I have?
What happens if I don’t pay?
Who should I contact?
What if I don’t agree or have already taken corrective action?
Click here to find answers to these questions.

The most important thing for the taxpayer to do at this point is to take action to address this concern immediately! A notification from the IRS stating their intention to “take” your financial assets is a serious concern! Tax payers should speak with a tax professional who specializes in CP 504 matters. A professional tax resolution specialist should be able to explain the three methods of resolving a CP 504 issue and which plan of resolution the taxpayer would best qualify for.

Friday, March 6, 2009

IRS Non-Filers – Part II

So you haven’t filed your tax returns in a good number of years and you need to get them filed. You are concerned about not having all of the income records from prior years and you can’t remember some of the places you have worked. Worse yet some of the places you have worked are no longer in business. What do you do? The answer is to call a tax professional. A tax professional can help you greatly in this area!

There are two very good reasons to hire a tax professional. First, the tax professional will contact the IRS on your behalf and obtain your Wage & Income Transcript for each year you need to file. This is the report that the IRS maintains on every taxpayer that keeps a running total of all income that has been reported to the IRS that you have earned. By doing this the tax professional will be able to list your income correctly on your tax returns. This will help you avoid a serious problem, which leads to the second reason you should hire a tax professional.

Many taxpayers have multiple sources of income and they fail to report all of it for one reason or another. This shows up later when the IRS performs a “tax match.” This is the process whereby the IRS matches the income you report to the record they have. If the taxpayer has underreported their income then this will cause the taxpayer to owe more money plus penalties and interest on the amount owed. There are more reasons to hire a tax professional. Call a tax professional today and they will help save you from future problems with the IRS!

IRS Non-Filers – Part I

Are you a “non-filer”? Were you a regular filer at some point in time and then, for whatever reason, drop out of the IRS system and have been wondering how to get back in “the system”? If so then it may not be a difficult as you think. As a tax consultant I encounter people with this concern quite frequently. For whatever reason they simply dropped out of the system and don’t know how to get back in.
First of all if a taxpayer has filed for the last 6 years plus the current year the IRS considers the taxpayer to be compliant. So all that is needed is to get these years filed and you are “back in the system!” Once these returns have been filed the IRS will consider you compliant and you simply move forward with filing all future returns on time and you should not have any more problems or concerns with the IRS. If you are not compliant I urge you to get compliant as soon as possible. Failure to do so will certainly cause huge problems at some point.