by Fresh Start Tax | Apr 19, 2017 | Tax Help
We are affordable tax firm that can resolve any IRS tax debt or tax filing problem. Local Experts in IRS Tax Debt Relief. Since 1982. A plus Rated BBB.
We have been in the tax resolution industry for a long time and there are many companies that exist today and have no business in this tax resolution vertical.
They charge large fees and give the work to back-end companies parties and the work never gets done.
There are many of these scam artists are around so I would caution everybody to make sure you check out the company, the credentials and ask to speak to the person who will be working your case.
While there are a plethora of many good tax firms, check the Better Business Bureau ratings and find out how long the company has existed and find out the complaint history of the company.
Make sure when you are hiring a company for IRS tax debt relief there’s a professional person who has a license to practice before the Internal Revenue Service.
You can call us today for a free initial tax consultation and we can give you a free assessment on your case.
We have been located right here in South Florida since 1982.
Our Firm
We are true experts on giving you every possible tax debt option to resolve your back IRS tax debt relief.
You can have back tax assistance by former IRS agents that were teaching instructors with the Internal Revenue Service.
As former IRS agents supervisors and teaching instructors we had great value to any taxpayer trying to sort out the different options they have with IRS if you owe back taxes have back tax debt, or have to file back tax returns.
We have over 95 years of direct IRS work experience in the local, district, and regional tax offices of the Internal Revenue Service.
We are one of the most experienced tax firms in the industry and are available for free initial tax consultation.
What we have to say is very important because we understand every possible methodology and settlement that IRS has.
We offer some of the finest IRS tax resolution services to go ahead and fully resolve your IRS tax debt.
You will receive a free assessment with your call.
by Fresh Start Tax | Apr 18, 2017 | Tax Help
Tips to Keep in Mind When Amending Your Tax Return
Taxpayers can fix mistakes or omissions on their tax return by filing an amended tax return.
Those who need to amend will find the following tips helpful.
1. File using paper form.
Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms at any time. Mail the Form 1040X to the address listed in the form’s instructions.
2. Amend to correct errors.
File an amended tax return to correct errors or make changes to an original tax return. For example, taxpayers should amend to change their filing status, or to correct their income, deductions or credits.
3. Don’t amend for math errors, missing forms.
Taxpayers generally don’t need to file an amended return to correct math errors on their original return. The IRS will automatically correct these items. In addition, taxpayers do not need to file an amended return if they forgot to attach tax forms, such as a Form W-2 or a schedule. The IRS will mail a request to the taxpayer, if needed.
4. File within three-year time limit.
Taxpayers usually have three years from the date they filed the original tax return to file Form 1040X to claim a refund. A taxpayer can file it within two years from the date they paid the tax, if that date is later. That means the last day for most people to file a claim for a refund for tax year 2013 is April 18, 2017. See Form 1040X instructions for special rules that may apply.
5. Use separate forms for each year.
Taxpayers who are amending more than one tax return must file a Form 1040X for each tax year. Mail each year’s Form 1040X in separate envelopes to avoid confusion.
Note the tax year of the amended return on the top of the Form 1040X. Check the form’s instructions for where to mail the amended return.
6. Attach other forms with changes. If a taxpayer uses other IRS forms or schedules to make changes, they need to attach them to the Form 1040X.
7. Wait to file for corrected refund for tax year 2016.
If due a refund from their original tax year 2016 return, taxpayers should wait to get it before filing Form 1040X to claim an additional refund. Amended returns may take up to 16 weeks to process.
8. Pay additional tax.
If the taxpayer will owe more tax, they should file Form 1040X and pay the tax as soon as possible to avoid penalties and interest. Consider using IRS Direct Pay to pay any tax directly from a checking or savings account at no cost.
9. Track your amended return.
Generally, a taxpayer can track the status of their amended tax return three weeks after they file with ‘Where’s My Amended Return?’ It is available in English, Spanish, Chinese, Korean, Vietnamese and Russian.
The tool can track the status of an amended return for the current year and up to three years back. If a taxpayer has filed amended returns for multiple years, they can check each year, one at a time.
Taxpayers should keep a copy of their tax return. Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
by Fresh Start Tax | Apr 18, 2017 | Tax Help
The Internal Revenue Service has received 103.6 million 2016 individual income tax returns as of April 7 and expects millions more to be filed by the April 18 deadline. Special filing deadline rules apply to members of the military serving in combat zones, those living outside the U.S. and those living in declared disaster areas.
The IRS also expects more than 13 million taxpayers to request a filing extension, giving them six additional months to complete and file their tax return.
Who Needs to File?
Not everyone is required to file a tax return. The requirement to file depends on a person’s income, filing status, age and whether they can be claimed as a dependent on someone else’s return. Anyone not sure whether they need to file a return should see Do I Need to File a Tax Return or refer to Publication 17, Your Federal Income Tax for Individuals, on IRS.gov.
For an estimated one million taxpayers who did not file a 2013 tax return, April 18, 2017, is the last day to file to claim their part of tax refunds totaling more than $1 billion.
Taxpayers due a refund must file a return within three years of its due date or the money becomes the property of the U.S. Treasury.
There are no late filing penalties if a refund is due.
According to the IRS, the most common reasons people do not file a return who should are: they don’t know how, may not have the documents needed or owe more tax than they can pay.
Taxpayers who owe more than they can pay should pay as much as they can by the due date in order to minimize interest and penalties.
Extensions of Time to File
Taxpayers who are not ready to file by the deadline should request an extension of time to file. An extension gives the taxpayer until Oct. 16 to file but does not extend the time to pay. Penalties and interest will be charged on all taxes not paid by the April 18 filing deadline.
There are several ways to do this. The fastest and easiest way to get an extension is through Free File on IRS.gov where some partners offer free electronic filing of the extension request. Extensions are free for everyone, regardless of income.
Taxpayers who earn $64,000 or less can return to Free File before Oct. 16 to prepare and e-file their taxes for free
IRS will automatically process an extension of time to file when taxpayers select Form 4868 and they are making a full or partial federal tax payment using IRS Direct Pay, the Electronic Federal Tax Payment System or by paying with a credit or debit card by the April due date.
There is no need to file a separate Form 4868 extension request when making an electronic payment and indicating it is for an extension.
Taxpayers also can complete and mail in Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to get a six-month extension.
Taxpayers Who Can’t Pay
Taxpayers should file by the deadline, even if they can’t pay, or pay as much as possible and ask the IRS about payment options. By filing a tax return, even without full payment, taxpayers will avoid the failure-to-file penalty. This penalty is assessed when the required return is not filed by the due date or extended due date if an extension is requested.
The failure-to-file penalty is generally 5 percent per month and can be as much of 25 percent of the unpaid tax. The penalty for returns filed more than 60 days late can be $205 or 100 percent of the unpaid tax.
The failure-to-pay penalty, which is the penalty for any taxes not paid by the deadline, is ½ of 1 percent of the unpaid taxes per month and can be up to 25 percent of the unpaid amount. Taxpayers must also pay interest on taxes not paid by the filing deadline.
The IRS reminds taxpayers that there is no law that permits taxpayers to refuse to file a federal tax return or refuse to pay their taxes.
This includes for reasons based on programs or policies with which they disagree on moral, ethical, religious or other grounds.
Taxpayers who file a frivolous tax return can be assessed a $5,000 penalty and civil penalties of up to 75 percent of the underpaid tax.
Frivolous tax returns are those tax returns that do not include enough information to figure the correct tax or that contain information clearly showing that the tax reported is substantially incorrect.
by Fresh Start Tax | Mar 31, 2017 | Tax Help
Local Affordable Tax Audit Specialists + We are an affordable South Florida team of IRS tax audit experts, former IRS agents and managers, since 1982. A + Rated BBB
We know the IRS audit and appeals system inside and out.
Not only were we former IRS agents we were teaching instructors and supervisors within the IRS audit system. We have over 65 years working the system.
We were former teaching instructors with the LOCAL Internal Revenue Service.
We worked both in audit and collection divisions. Since 1982, we have been representing people in the South Florida, Fort Lauderdale and Miami area.
You want to hire IRS agents because of their knowledge of the working system of Internal Revenue Service.
There a lot of methodologies to working IRS cases , all our experiences can collaborate into the very best tax result possible.
Many profess to be experts in the area of IRS tax audits but unless you have handled thousands of cases and been involved in the system on a daily basis you do not know the complete working system of Internal Revenue Service.
When you are involved in an IRS tax audit you also want to be able to fix the problem so IRS does not come after you in the future. We can help audit proof your tax return.
When you call for your initial tax consultation we will fully review the scope of your case give you an expert opinion on the likelihood of settlement in different options.
What are the chances of an IRS Audit? Less than one percent, that’s it.
If you got an audit letter, you are very unlucky.
And the chances are, there’s a very specific reason why you got in IRS audit letter.
At Fresh Start Tax LLC you will be represented by a CPA or former IRS agent who knows the system and can provide your very best tax audit defense.
If we cannot settle your case at the local office will take your case to the Appellate Division or settlements and the best deals are usually made.
We know this from our years of IRS experience.
It only makes sense to have Former IRS Agents and IRS Tax Audit Managers handle your IRS tax audit and give you the most experienced and successful expert IRS Tax Audit Help.
We can also tell you how to help audit proof your return in the future.
IRS audits are very predictable and after reviewing thousands of tax returns over the years we can tell you which cases are going to be subject for IRS tax audits.
Facts about IRS Tax Audits: Lucky us
• The IRS audits a total of 1,391,581 tax returns a year. This number goes up or down depending on the IRS budgets for tax audits.
• The IRS field agents complete more than 310,000 audits by office or business visits a year,
• The IRS completes over 1,081,152 correspondence audits a year. IRS collects a little over $5 million a year from his correspondence audits,
• IRS has installed new software tracking systems with the development of the CADE 2 computer to spot and recognize tax audits more proficiently,
• IRS employs over 13,000 IRS auditors.
• $5.2 billion dollars are collected through the IRS document matching program. These programs are W-2 and 1099 oriented.
• For truly professional IRS Tax Audit help contact former IRS Agents and Managers.
The Secret Formula: How The IRS Picks Audits
The IRS uses a quantitative method called discriminate Analysis to identify the ‘underreporters’ from the normal returns, driven largely by the following details.
• Schedule A Ratio: They’ll audit you if your schedule A (Itemized) deductions are more than 44% of your income.
• Schedule C Ratio: They’ll audit you if your ratio of schedule C (Business) deductions is more than 63% of income.
• Schedule F Ratio: They’ll audit you if your ratio of schedule F (Farm) deductions is more than 67% of income.
• Audits are 4x more likely if you own a business and 2x if you own a farm.
• The Obama administration has focused on high earners:
◦ Audits 5x more likely if your income is above $100,000.
◦ 20% chance of audit if you make $10+ million. (20x the average audit rate)
◦ 12% chance of audit if you make $5-10 million. (12x the average audit rate)
• Occupation affects your audit likelihood
◦ 22% of business and personal services companies are audited every year.
◦ 16% of building contractors are audited every year.
The IRS Tax Audit Examination Plan:
What you Need to Know about the IRS
The IRS audit plan that is used by the IRS is based on long-range coverage planning, and objectives on the resources requested in the Congressional Budget.
From this, there is an established plan where staff years are allocated to all area IRS offices using resource allocation and a prescribed methodology.
Each Area Manager of the IRS is responsible for preparing an area response following instructions from the National Headquarters.
Why the IRS Audits Tax Returns
IRS Tax Audits : Although there are a variety of reasons listed below some are the most common.
a. Front Loaded Programs
Front Loaded programs are those tax audits that IRS DC headquarters has determined are very important and a considerable amount of time must be spent on these programs and activities. Each area has discussions within management as to what the programs should be for each region, district, and office.
Some of the programs are:
• Special enforcement programs – An example of this may be compliance of all flee market vendors, a program I was involved with
• High Income non-filers – The IRS would get their information from a match program of w-2’s and 1099’s and match up social security numbers against filed returns
• Abusive Tax Avoidance – This could be in the area of offshore activities
• Offshore credit card program
• National Research programs – Those set forth by management after doing a trends project
• FBAR filing – IRS is currently targeting those with overseas bank accounts
• Non- filers – IRS is presently forming a task force to seek non-filers though aggressive means.
b. The IRS makes sure there is balanced coverage.
The National Office makes sure there is a balanced approach for audit return delivery and tax compliance. Resources and inventory and the size of personnel all go into this formula.
IRS focuses are blended into these areas:
1. Individual returns less than $100,000.
2. Individual returns greater than $100,000 but less than $200,000.
3. Individual returns greater than $ 200,000.
4. Small Business Corporations.
5. Small Business Flow-Through Entities – S Corporations, Fiduciaries and Partnerships.
c. Classification Plan
The IRS will prepare a plan, which is classified. A National DIF score indicator is placed on all Federal Income tax returns that are filed.
Each tax return has certain factors that contribute to its score such as Gross Income, Adjusted Gross Income and line item expense.
There are several classified secrets that go into the DIF score.
Each tax return is processed through the IRS computer line item by line item.
A DIF score label is placed on every tax return with its DIF number.
A tax examiner or Revenue Agent manually eyeballs each and every tax return with a high DIF score.
The examiner then determine which return has the highest probability of tax audit success.
d. DIF Cutoff Score, this is the most common reason for audit. each and every tax return has a DIF score, this stands for discriminatory index function.
The IRS will calculate the Area DIF cutoff score for each activity code, giving consideration to the selection rate.
This is the lowest DIF score necessary to secure the number of returns required for audit. For example, if the return plan shows 225 returns for an activity code and the selection rate is 70%, the IRS will need to order 321 returns (225/70%).
The DIF Cut off Score is 500. The number of returns with DIF scores greater than 550 is 280, which is less than the number of returns required, so the lowest DIF score on an ordered return will be in the range of 500 to 550 and the DIF cutoff score is 500.
All tax returns are graded by the Internal Revenue Service. That’s right, each and every tax return has a DIF score.
There is a label placed on the back of every tax return that grades audit potential.
Much of the audit numbers are predicated on the budget that Congress gives to the IRS.
Over the last couple years the number of audits are going down by small percentages simply because they do not have working staff to handle all the IRS audits that are truly needed. It is not wise to play the audit lottery.
Call us today for a free initial tax consultation and we will review your tax returns, go over best case scenarios and talk about your IRS tax defense for an IRS audit.
by Fresh Start Tax | Mar 23, 2017 | Tax Help
We are AFFORDABLE tax firm that can help resolve any IRS tax problem including tax preparer issues and problems. Since 1982. A plus Rated BBB, a professional tax firm.
You can get professional and expert representation by former IRS agents that were teaching instructors and managers with the Internal Revenue Service.
Do not fool around with this!
As former IRS agents supervisors and teaching instructors we had great value to any tax preparer trying to sort out any problem.
We have over 95 years of direct IRS work experience in the local, district, and regional tax offices of the Internal Revenue Service.
We are one of the most experienced tax firms in the industry and are available for free initial tax consultation.
The IRS are going gangbusters on preparers and they are waging war and assessing penalties based on the IRC sections applicable below.
It is best to fight back using former IRS Agents who know the system.
Free consults.
• Individuals who prepare a tax return or refund claim for compensation or who hire others to prepare returns for compensation are tax return preparers. Preparation of a “substantial portion” of a return or claim for refund is treated as preparation of that return or claim for refund. Tax return preparers can be signing or non-signing preparers.
• Tax return preparers are subject to penalties under Sec. 6694 for understatements due to unreasonable positions and due to willful, reckless, or intentional conduct and Sec. 6695 for failing to perform certain duties or for engaging in prohibited conduct (e.g., failing to provide a copy of a return to the taxpayer or negotiating a tax refund check).
• Both a tax preparer and the firm that employs the preparer, or of which he or she is a partner, member, shareholder, or other equity holder, may be subject to a Sec. 6694 penalty for a position giving rise to an understatement.
• The Sec. 6694 penalties and most of the Sec. 6695 penalties are subject to a reasonable-cause exception.
• A number of other serious civil and criminal penalties may also apply to tax return preparers.
• Individuals who prepare a tax return or refund claim for compensation or who hire others to prepare returns for compensation are tax return preparers. Preparation of a “substantial portion” of a return or claim for refund is treated as preparation of that return or claim for refund. Tax return preparers can be signing or non-signing preparers.
• Tax return preparers are subject to penalties under Sec. 6694 for understatements due to unreasonable positions and due to willful, reckless, or intentional conduct and Sec. 6695 for failing to perform certain duties or for engaging in prohibited conduct (e.g., failing to provide a copy of a return to the taxpayer or negotiating a tax refund check).
• Both a tax preparer and the firm that employs the preparer, or of which he or she is a partner, member, shareholder, or other equity holder, may be subject to a Sec. 6694 penalty for a position giving rise to an understatement.
• The Sec. 6694 penalties and most of the Sec. 6695 penalties are subject to a reasonable-cause exception.
• A number of other serious civil and criminal penalties may also apply to tax return preparers.
Summary of Preparer Penalties under Title 26
IRC § 6694 – Understatement of taxpayer’s liability by tax return preparer.
IRC § 6694(a) – Understatement due to unreasonable positions. The penalty is the greater of $1,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.
IRC § 6694(b) – Understatement due to willful or reckless conduct. The penalty is the greater of $5,000 or 50% of the income derived by the tax return preparer with respect to the return or claim for refund.
IRC § 6695 – Other assessable penalties with respect to the preparation of tax returns for other persons.
IRC § 6695(a) – Failure to furnish copy to taxpayer. The penalty is $50 for each failure to comply with IRC § 6107 regarding furnishing a copy of a return or claim to a taxpayer. The maximum penalty imposed on any tax return preparer shall not exceed $25,000 in a calendar year.
IRC § 6695(b) – Failure to sign return. The penalty is $50 for each failure to sign a return or claim for refund as required by regulations. The maximum penalty imposed on any tax return preparer shall not exceed $25,000 in a calendar year.
IRC § 6695(c) – Failure to furnish identifying number. The penalty is $50 for each failure to comply with IRC § 6109(a)(4) regarding furnishing an identifying number on a return or claim. The maximum penalty imposed on any tax return preparer shall not exceed $25,000 in a calendar year.
IRC § 6695(d) – Failure to retain copy or list. The penalty is $50 for each failure to comply with IRC § 6107(b) regarding retaining a copy or list of a return or claim. The maximum penalty imposed on any tax return preparer shall not exceed $25,000 in a return period.
IRC § 6695(e) – Failure to file correct information returns. The penalty is $50 for each failure to comply with IRC § 6060. The maximum penalty imposed on any tax return preparer shall not exceed $25,000 in a return period.
IRC § 6695(f) – Negotiation of check. The penalty is $500 for a tax return preparer who endorses or negotiates any check made in respect of taxes imposed by Title 26 which is issued to a taxpayer.
IRC § 6695(g) – Failure to be diligent in determining eligibility for earned income credit. The penalty is $500 for each failure to comply with the EIC due diligence requirements imposed in regulations.
IRC § 6700 – Promoting abusive tax shelters
The penalty is for a promoter of an abusive tax shelter and is generally equal to $1,000 for each organization or sale of an abusive plan or arrangement (or, if lesser, 100 percent of the income derived from the activity).
IRC § 6701 – Penalties for aiding and abetting understatement of tax liability.
The penalty is $1000 ($10,000 if the conduct relates to a corporation’s tax return) for aiding and abetting in an understatement of a tax liability. Any person subject to the penalty shall be penalized only once for documents relating to the same taxpayer for a single tax period or event.
IRC § 6713 – Disclosure or use of information by preparers of returns.
The penalty is $250 for each unauthorized disclosure or use of information furnished for, or in connection with, the preparation of a return. The maximum penalty on any person shall not exceed $10,000 in a calendar year.
IRC § 7206 – Fraud and false statements.
Guilty of a felony and, upon conviction, a fine of not more than $100,000 ($500,000 in the case of a corporation), imprisonment of not more than three years, or both (together with the costs of prosecution).
IRC § 7207 – Fraudulent returns, statements, or other documents.
Guilty of a misdemeanor and, upon conviction, a fine of not more than $10,000 ($50,000 in the case of a corporation), imprisonment of not more than one year, or both.
IRC § 7216 – Disclosure or use of information by preparers of returns.
Guilty of a misdemeanor for knowingly or recklessly disclosing information furnished in connection with a tax return or using such information for any purpose other than preparing or assisting in the preparation of such return. Upon conviction, a fine of not more than $1,000, imprisonment for not more than 1 year, or both (together with the costs of prosecution).
IRC § 7407 – Action to enjoin tax return preparers.
A federal district court may enjoin a tax return preparer from engaging in certain proscribed conduct, or in extreme cases, from continuing to act as a tax return preparer altogether.
IRC § 7408 – Action to enjoin specified conduct related to tax shelters and reportable transactions
A federal district court may enjoin a person from engaging in certain proscribed conduct (including any action, or failure to take action, which is in violation of Circular 230).
Note: Please see the Internal Revenue Code, corresponding Treasury Regulations, and other related published guidance for additional information on each penalty section.
