Do you have a tax problem with the IRS and need help? If so then I would recommend calling a tax professional. In my experience in dealing with IRS tax matters most taxpayers who have problems with the IRS seldom know what the issue really is. Furthermore it is very difficult for the taxpayer to retrieve the necessary information from the IRS in order to determine what their problem is and how to fix it.
A tax professional will usually take a taxpayer through a few steps that are required to resolve a taxpayers issue with the IRS. Usually the most complex type of personal income tax problem is when a taxpayer has unfiled tax returns and owes the IRS money. A tax professional can be very helpful here. Step 1 is to retrieve and analyze the taxpayer’s masterfile and income transcripts. Step 2 is to file the unfiled returns using the income information and other relevant information from the taxpayer’s masterfile and income transcripts. Step 3 occurs after the returns have been filed and the total liability is known.
This is the resolution phase. This is when the tax professional begins the process of negotiating directly with the IRS to get the final tax liability resolved. These steps may sound simple whereas in reality they can be quite complex. If you need help and are considering going it alone think again! Taking on the IRS without any knowledge of how the organization operates can be very costly! You would be wise to, at the very least, consult with a tax professional.
Friday, June 26, 2009
IRS Certified Letters
One of the most common reasons taxpayers call my firm is in response to certified letters from the IRS. Whenever a taxpayer receives mail of this nature it is usually not a good thing. The IRS is attempting to send a taxpayer a serious communication and these letters usually indicate that the IRS is attempting to collect a debt. This mail should be opened immediately, read and responded to as quickly as possible.
If the taxpayer is in collections with the IRS they will receive two certified letters spaced about 30 days apart. The first letter is an initial notice. The second is a final notice. The bottom line is the IRS means serious business and they will take action. The IRS is a priority creditor and needs to be given the full attention of the taxpayer. If you find yourself in this position call someone to represent you before the IRS and do it quick because time is NOT on your side.
If the taxpayer is in collections with the IRS they will receive two certified letters spaced about 30 days apart. The first letter is an initial notice. The second is a final notice. The bottom line is the IRS means serious business and they will take action. The IRS is a priority creditor and needs to be given the full attention of the taxpayer. If you find yourself in this position call someone to represent you before the IRS and do it quick because time is NOT on your side.
Friday, June 19, 2009
IRS Penalty Abatement
This is what everyone wants when they incur a penalty from the IRS. Sometimes the IRS will grant it, sometimes they won’t. One of the more common penalties is the failure to file penalty. The IRS will assess this penalty against a taxpayer if the taxpayer has not filed their return by the due date or if the taxpayer as not filed an extension by the due date. Getting penalties abated is no easy task. The IRS doesn’t simply remove penalties by someone asking them kindly or by using highly technical language. The IRS will consider penalty abatement only if there is a rock solid reason why they should not charge the penalty.
This is the first step in having a failure to file penalty abated. There has to be some reason the taxpayer did not file their return by the due date. Feeling sick, working too many hours, did not understand the tax changes for the current year and so forth and so on are not reasons the IRS would consider in abating penalties. Generally the event that prevented a taxpayer from filing must be catastrophic in nature such as a severe medical illness, an act of God such as a hurricane, earthquake, fire or landslide or something of the sort. Whatever the event is it must be thoroughly documented and submitted to the IRS. Then and only then will the IRS consider removing the failure to file penalty.
In a prior blog I mentioned the devastating effect of allowing penalties to accumulate. This is something not to be taken lightly. This has the power to cause tremendous financial problems for taxpayers. If you have questions regarding penalty abatement you should consult with a tax professional who can advise you properly.
This is the first step in having a failure to file penalty abated. There has to be some reason the taxpayer did not file their return by the due date. Feeling sick, working too many hours, did not understand the tax changes for the current year and so forth and so on are not reasons the IRS would consider in abating penalties. Generally the event that prevented a taxpayer from filing must be catastrophic in nature such as a severe medical illness, an act of God such as a hurricane, earthquake, fire or landslide or something of the sort. Whatever the event is it must be thoroughly documented and submitted to the IRS. Then and only then will the IRS consider removing the failure to file penalty.
In a prior blog I mentioned the devastating effect of allowing penalties to accumulate. This is something not to be taken lightly. This has the power to cause tremendous financial problems for taxpayers. If you have questions regarding penalty abatement you should consult with a tax professional who can advise you properly.
I Forgot To File My Taxes
This is going to sound like an advertisement for Ripley’s Believe It Or Not but it’s actually a real thing! Sometimes taxpayers forget to file their taxes. If this has happened to you then the best thing you can do is to correct the problem as soon as feasibly possible to prevent the build up of penalties and interest. A tax professional can help greatly with this.
A problem for some people is that they do not have their W-2s or 1099s for the unfiled years. This can cause problems if not addressed correctly due to the fact that when tax returns are filed with the IRS they go through a “matching” process where they match the income listed on the tax return to the income contained in the IRS records. Where I work, our approach is to retrieve this information directly from the IRS and use their income information to prepare the returns. This ensures accuracy.
The benefit to working with a tax professional to resolve an outstanding issue of this sort is that first of all it will get you compliant with the IRS which means it eliminates the chance of you going to jail! Currently there are quite a few taxpayers who have not filed their returns. If you are one of them I would like to highly encourage you to take action and get this situation resolved immediately! You will not regret it!
A problem for some people is that they do not have their W-2s or 1099s for the unfiled years. This can cause problems if not addressed correctly due to the fact that when tax returns are filed with the IRS they go through a “matching” process where they match the income listed on the tax return to the income contained in the IRS records. Where I work, our approach is to retrieve this information directly from the IRS and use their income information to prepare the returns. This ensures accuracy.
The benefit to working with a tax professional to resolve an outstanding issue of this sort is that first of all it will get you compliant with the IRS which means it eliminates the chance of you going to jail! Currently there are quite a few taxpayers who have not filed their returns. If you are one of them I would like to highly encourage you to take action and get this situation resolved immediately! You will not regret it!
Friday, June 12, 2009
It’s Expired - IRS Collection Statutes
Cottage cheese has it. Coke products have it. Lunch meats in your local grocery store have it. And your IRS tax debt has it! Can you guess what I’m talking about? I’m talking about expiration dates! Now the expiration dates on an IRS tax debt are not quite as short as the expiration dates on perishables items you will find in a grocery store. They last a little bit longer. Try 10 years for example! Yes, 10 years!
When the IRS records in their computer system a tax debt that a taxpayer owes the IRS generally has 10 years to collect the liability provided nothing has occurred to extend the collection statute. This is very important information to know! I will provide one example of how information like this can be very helpful to a taxpayer. Our firm had a client who owed a large sum of money to the IRS from where the IRS filed a return for the taxpayer. This is known as an SFR, the industry terminology for “substitute for return.” This is when the IRS takes the income that has been reported to them that a taxpayer has earned and they file a return as a substitute for the taxpayer’s original return.
Often times and SFR does not take into account all of the deductions a taxpayer may have. If the taxpayer had substantial write-offs or deductions then it may be wise to file a tax return “over” the SFR the IRS filed for the taxpayer in order to lower the liability. Taxpayers need to exercise caution when considering such an action and should consider the expiration date of the SFR. If the SFR will be expiring soon then the taxpayer may not want to file over the SFR because by so doing the newly filed return will “reset” the clock and give the IRS a full 10 years to collect on the liability established by the newly filed return.
I heard of the client who took independent action and filed over the old return and lowered their liability but could have waited just a few short months to when the liability would have been no longer collectible. The moral of this story is KNOW YOUR COLLECTION EXPIRATION DATES! Our firm offers a service to taxpayers to help them find out what their collection expiration dates are. When in doubt, check it out!
When the IRS records in their computer system a tax debt that a taxpayer owes the IRS generally has 10 years to collect the liability provided nothing has occurred to extend the collection statute. This is very important information to know! I will provide one example of how information like this can be very helpful to a taxpayer. Our firm had a client who owed a large sum of money to the IRS from where the IRS filed a return for the taxpayer. This is known as an SFR, the industry terminology for “substitute for return.” This is when the IRS takes the income that has been reported to them that a taxpayer has earned and they file a return as a substitute for the taxpayer’s original return.
Often times and SFR does not take into account all of the deductions a taxpayer may have. If the taxpayer had substantial write-offs or deductions then it may be wise to file a tax return “over” the SFR the IRS filed for the taxpayer in order to lower the liability. Taxpayers need to exercise caution when considering such an action and should consider the expiration date of the SFR. If the SFR will be expiring soon then the taxpayer may not want to file over the SFR because by so doing the newly filed return will “reset” the clock and give the IRS a full 10 years to collect on the liability established by the newly filed return.
I heard of the client who took independent action and filed over the old return and lowered their liability but could have waited just a few short months to when the liability would have been no longer collectible. The moral of this story is KNOW YOUR COLLECTION EXPIRATION DATES! Our firm offers a service to taxpayers to help them find out what their collection expiration dates are. When in doubt, check it out!
IRS Secrets
This may be the single most important blog you will ever read if you have issues with the IRS. Before you read this blog I want to provide the reader with four definitions Merriam-Webster gives for the word “secret.” Merriam-Webster writes that a secret is something that is “kept from knowledge or view” “working with hidden aims or methods” “not acknowledged” and “designed to elude observation or detection.” As you read this blog I want you to keep these definitions in mind.
The IRS maintains a file on each and every taxpayer. This file is “kept from knowledge or view” due to the fact that the IRS is highly reluctant to grant individual taxpayers access to their IRS file. Information contained in this “secret file” can be invaluable to anyone who has issues with the IRS. The information contained in the file can be used to help the taxpayer understand where they are in the collection process, how much they owe, how penalties have accrued, when the liabilities expire and much more.
The firm I work for has very recently introduced a revolutionary service to taxpayers which will allow taxpayers to obtain full information from their “secret” IRS file! Any reader desiring to know the contents of their IRS “secret file” should contact me at the toll-free number listed on my blog. One last note…obtaining a copy of the file will not bring attention to the one requesting the file. Don’t wait! Find out today!
The IRS maintains a file on each and every taxpayer. This file is “kept from knowledge or view” due to the fact that the IRS is highly reluctant to grant individual taxpayers access to their IRS file. Information contained in this “secret file” can be invaluable to anyone who has issues with the IRS. The information contained in the file can be used to help the taxpayer understand where they are in the collection process, how much they owe, how penalties have accrued, when the liabilities expire and much more.
The firm I work for has very recently introduced a revolutionary service to taxpayers which will allow taxpayers to obtain full information from their “secret” IRS file! Any reader desiring to know the contents of their IRS “secret file” should contact me at the toll-free number listed on my blog. One last note…obtaining a copy of the file will not bring attention to the one requesting the file. Don’t wait! Find out today!
Friday, May 29, 2009
IRS Penalties – A Financial Nightmare
IRS penalties can be a nightmare! Most people probably do not understand just how devastating penalties imposed by the IRS can be. For individuals the IRS applies two types of penalties. One is the failure to file penalty and the other is the failure to pay penalty. The failure to file penalty is 5% of the balance due as of April 15th and continues for 4½ months. The failure to pay penalty is approximately ½ of 1% per month and is applied to any unpaid balance until the total interest charge reached 25%. The failure to pay penalty can not exceed 25%. Now let’s see how this works out.
Suppose a taxpayer did not file a tax return for 2002, 2003 and 2004. Let’s further assume that the taxpayer owed approximately $5,000 for each of those years. The IRS will apply 5% per month for approximately 4½ months to each balance. So now each balance is approximately $6,125. Next they will apply approximately ½ of 1% per month to each balance. Seeing as how the returns are fairly old the total interest rate applied will be 25%. So now each balance would be $7,375. So this taxpayer would owe $22,125 instead of $15,000 that was originally owed. This taxpayer needs help and needs help quickly! This does not take into consideration the fact that interest is continuing to accumulate. A tax professional can offer good advice on how to handle this.
Suppose a taxpayer did not file a tax return for 2002, 2003 and 2004. Let’s further assume that the taxpayer owed approximately $5,000 for each of those years. The IRS will apply 5% per month for approximately 4½ months to each balance. So now each balance is approximately $6,125. Next they will apply approximately ½ of 1% per month to each balance. Seeing as how the returns are fairly old the total interest rate applied will be 25%. So now each balance would be $7,375. So this taxpayer would owe $22,125 instead of $15,000 that was originally owed. This taxpayer needs help and needs help quickly! This does not take into consideration the fact that interest is continuing to accumulate. A tax professional can offer good advice on how to handle this.
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