Tax problems? We’ve been providing IRS Solutions for years.
Problems we solve:
Our IRS solutions:
Do you owe back payroll taxes?
Scary, huh? This is a biggie! We know you didn’t do it on purpose. Life happens. Business downturns or
unexpected bumps force you to make hard choices. Then you ended up in the dark place of having the IRS breathing down your neck. Something you never could have imagined when you joyfully started your business. But don’t worry, it can be resolved.
Payroll tax liabilities are handled differently by the IRS than other tax obligations. Here are some things you should know:
- Getting compliant with current payroll tax obligations should be the first thing on your list. Don’t miss another payment. Cut back on your employee hours, cut your own salary, or do whatever you have to do to be able to make the payroll tax deposit every time you run payroll.
- Get into an installment agreement for the back tax liability. This can be very difficult as there are financial disclosure forms to submit and hoops to jump through, but it has to happen so your bank account is not levied.
- The IRS will likely assess what’s called “Trust Fund Recovery” penalties. These penalties are assessed to the individuals responsible for making the payroll tax deposits. There are potential ways around the assessment, but that gets very complicated.
The sooner you get a handle on this, the better!
Do you have unfiled tax returns? This is much more common than you think, so don’t feel bad! Divorce, illness and overload when life gets rough are a few of the common reasons. We understand the stress of it all! But there is light at the end of the tunnel. Here is a little glimpse of what you can expect in the process of handling IRS resolution. When our clients have unfiled returns, here are the steps we take:
- We call the IRS, do a thorough case review and ask them what periods they are looking for. They give us a deadline for submission. Unfortunately getting through to them is difficult because they hang up (it’s called a “courtesy disconnect”) on millions of callers every year. And then if you do get through, the odds of the representative on the other end of the phone being properly trained to handle your situation are low. Perseverance is key at our office. And we know your rights so can’t be bullied with collection tactics.
- We prepare and file the returns. This is easier said than done. Sometimes the client doesn’t have the information. That’s okay. Recreating it is possible, in most cases, with bank statements and IRS income transcripts.
- Once the returns have been filed, processed and the tax assessed, we start with the actual resolution of the debt process. When you’re in a resolution option, you don’t have to worry about IRS levies or seizures. A good place to be!
Did you fall out of your installment agreement? Don’t panic! But do take action. The sooner you deal with this, the better the outcome. Not paying is generally not from refusal, but from being unable. If you legitimately can’t afford the installment agreement, we submit your financial information and either:
- request a lower payment or
- Get you into Currently Not Collectible status
You must financially qualify for these. This means that the amount left over between your income and your “necessary” living expenses is all you can afford to pay. “Necessary” living expenses don’t include expensive car payments, mortgage payments or any unsecured debt payments. If your obligations are out of line with the national standards allowed, there can potentially be a one year lower payment with the agreement that you downsize and pay more on the debt later.
Do you owe on your income tax from prior years? This can be the result of many different situations. Some common ones include:
- Maybe your spouse told you she was filing and paying the tax, but she didn’t. Then she left. And you’re left holding the bag.
- Retirement savings withdrawal. When you’re under the age of 59 ½ and don’t have a qualifying reason for the withdrawal, it is subject to a 10% early withdrawal penalty as well as ordinary income tax. Ouch! Many times there is no tax withheld and you end up in a bad spot!
- Not making estimated tax payments. We see this all the time with business owners and 1099 contractors. You had a great year in business, but no one told you to send some in for your tax. Now you’ve spent all the money and owe all the tax and a dark cloud develops. What next?
- Income reported to the IRS but not included on your tax return. Most times the taxpayer never got this piece of paper. Somehow it got lost and not included on the original tax return. But it triggers a letter assessing more tax along with a demand for payment. This needs to be looked at carefully, as many times it can be reduced.
- If you had stock sales reported, the IRS assessed tax on the sale price and likely didn’t take your basis in the stock into account. This can cause very large assessments that are completely inaccurate!
- If you had cancellation of debt income reported on Form 1099-C, it might qualify for exclusion from your taxable income. Some examples are debt from your main home or other debt if you were insolvent on the date of the forgiveness.
- If you received a 1099 for work performed, the IRS will not take into account any expenses incurred in earning the income. These have to be added by you with an amended return.
- An Audit. Audit findings aren’t set in stone. Is it correct? Did you respond to the audit notices? We had one client who came in owing $100k from an audit he didn’t respond to. When we finished, his tax liability was $0.
- Maybe your tax preparer was found to be perpetuating Earned Income Credit Fraud. This is serious business and we see taxpayers pretty frequently who got big tax refunds from the Earned Income Credit that was later disallowed because they weren’t entitled to it. When a tax preparer is filing these fraudulent returns and getting big refunds for their clients, the IRS may audit their entire client base. Yes, the preparer gets in trouble, but so do their clients, even when they have no idea they did anything wrong. The IRS will demand that the money be repaid.
- If you or your family members have suffered an accident or extended illness.
- Trouble with children or parents:
- Aging or ill parents
- Sick, special needs or drug addicted children
- Business downturn
- An increase in business
No matter the reason for the liability, there are ways to resolve the situation. They include:
- An Installment Agreement
- Currently Not Collectible Status
- An Offer in Compromise where the IRS agrees to accept an offer of less than what you owe. Everyone wants this one! But it’s not that simple. We do Offers all the time for people who qualify and can prove that they can’t afford to pay.
In order to get into a resolution, it is important to note that you must be current with making your estimated tax payments (or withholding for the current year) and have filed all tax returns.
Call today for a FREE consultation at (386)-320-5347 or (407)-476-9580 .