by Fresh Start Tax | Oct 14, 2013 | Tax Help
I am a former IRS agent and teaching instructor and I wish I had a dollar for every time somebody asked me this question.
Let me answer this question right off the bat.
There is no statute of limitations on back tax returns.
IRS has the right to ask you to file as many back tax returns if you did not file your tax returns.
As a Practical Matter
As a practical matter however, the Internal Revenue Service will ask you to file the last six tax returns to get your case back into the system. In some cases, the Internal Revenue Service may require the last three years worth of back tax returns. Each case is worked individually based on the facts of the case.
It is up to the agent on the case to make that decision. Many times your assets will play a factor into how many back tax returns the IRS will determine you need to file.
Sadly, many taxpayers lose there tax refunds and tax credits by failing to file back tax returns. They also lose Social Security credits as well.
A good professional tax firm can help you through the process and save you many tax dollars by understanding the system, the protocol and what it will take to satisfy IRS without it costing you a fortune.
The Statute of Limitations for the IRS on back tax returns.
The code does not address this because there is no statute, however Title 26 of the United States Code, Section 6502, sets a statute of limitations for the IRS on the collection of unpaid taxes.
Many taxpayers wrongly interpret this code section by assuming that if an unfiled or past due return occurred more than ten years ago, the IRS cannot collect taxes.
The statute of limitations applies once taxes are actually assessed, either by means of a return that is filed late, or one that is prepared for you by the IRS, or any settlement agreement that you have come to with the IRS.
As a side note, that collection statute runs from the IRS date of assessment and not the date filed.
There is another statute of limitations that precludes you from receiving a tax refund for an unfiled return that is more than three years delinquent. If you think you have a tax refund coming in better file your tax returns within three years from the April 15 due date.
Once your unfiled returns passes this three-year mark any tax refund that you could have received had you filed in a timely manner becomes the property of the IRS and Uncle Sam. Unfortunately many taxpayers have the ostrich syndrome, they placed their heads in the sand without realizing they lost their tax refunds and tax credits.
The Tolling the Statute of Limitation on Collections of Tax
The 10-year statute of limitations can be extended in some circumstances.
This occurs when you file a appeal with the IRS, such as a request for relief (a ( CDP ), an offer in compromise, the filing bankruptcy, tax litigation can also toll the statute of limitations, as can signing a waiver that allows tax collection to extend past the 10-year mark. This waiver is on IRS Form 900. You should never sign a waiver unless you get professional tax advice.
IRS can prepare your tax return under 6020 of the IRC. They can file what is known as a substitute for return, a SRF.
If you do not file your returns, the IRS will prepare a substitute for return for you based on an estimation of your income. IRS can simply reconstruct your tax return or they will prepare your tax return based on information they have on their CADE 2 computer system based on third-party records. Any time anyone has sent income to you over $600 they are required to send the IRS W-2s, 1099 or other documents. IRS keeps these on their system for seven years.
The Internal Revenue Service will prepare your tax return allowing you as a dependent and that’s it. They will allow you no business expenses, no tax credits, no miscellaneous the deduction’s.
You will pay the highest amount of tax by law if the Internal Revenue Service prepared your tax return based on SRF. So if you do not file for a number of years the IRS will simply file your tax return.
If IRS filed your tax return for you you can reverse this tax process by filing for an IRS audit reconsideration. Contact us for details on this procedure.
If the IRS makes a tax assessment for you this will cost you dearly
The Internal Revenue Service generally prepares tax returns for taxpayers that they know will owe tax. I have never experienced the IRS prepare tax returns for people and issue refunds.
Once your back taxes are assessed, the IRS will send you a Notice and Demand for Payment, after which you have ten days to respond. As a general rule they will send you a series of 3 to 4 notices. Each one stepping it up a little more until they’re ready to put the hammer down.
Should you ignore this tax notice, the IRS will then send you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing.
An IRS agent may deliver this to you in person or leave it at your home or place of employment or send it by certified mail.
If the IRS cannot locate you, it will mail the notice to your last known address by certified or registered mail. Unfortunately many taxpayers that have moved never notified IRS in will receive a bank levy or wage Levy garnishment without ever receiving a tax bill from the Internal Revenue Service.
Once the IRS sends out its final notice and you do not call the Internal Revenue Service you can expect IRS to take enforced collection actions.
Collection methods of the IRS
The IRS has a variety of methods in its arsenal. They are the largest and most powerful collection agency in the world.
The IRS can place a federal tax lien against your assets for the amount of the unpaid taxes.
As a general rule the Internal Revenue Service will issue an IRS Bank Levy or wage garnishment notice.
If you received an IRS bank levy you have 21 days to reverse the process by calling the Internal Revenue Service.
If you are received an IRS wage garnishment notice the employer is required to send your next pay check to the IRS. Some exemptions are available for an IRS wage garnishment.
Should you have any questions contact us today. We are available for free tax consultations. We are the affordable nationwide tax firm.
How many years of Back Tax Returns should you file – The IRS Statute of Limitations
by Fresh Start Tax | Oct 14, 2013 | Tax Help, Tax Returns
Help with Unfiled, Delinquent Tax Returns
If you have unfiled or delinquent tax returns that need to be filed we can get you or your business back in the system worry free.
Contact us today and we can walk through this process worrying stress-free.
We are the affordable tax company.
If you owe Back Taxes ?
If you will wind owe back taxes as a result of unfiled, delinquent Tax Returns, FST can work out a tax settlement for you at the same time.
IRS will take a current financial statement and assess your case if you owe back taxes.
As a result of your financial statement you will either wind up in an economic tax hardship status, enter a payment agreement or IRS will settle your case with an offer in compromise.
We can file your unfiled, delinquent tax returns and make a tax settlement with the IRS at the same time.
There are million of taxpayers who failed to file their back tax returns but by not doing so taxpayers do themselves harm. You can lose benefits and possible tax refunds.
Some taxpayers can find themselves having:
- possibility of criminal problems,
- losing your Social Security and Medicare benefits while others are
- losing money the IRS would be refunding to him because of withholding in tax credits.
- peace of mind.
The process to get your back tax returns filed with the Internal Revenue Service is very simple and if you’re reading this you’ve already taken the first step to make that happen.
Lost Tax Records, no problems
If you need to file back income tax returns but you have lost your tax records, a professional tax firm should easily be able to assist you in this process. The process is call tax reconstruction.
It is a system used by the IRS to reconstruct your tax return from scratch.
Being Former IRS agents,managers,and instructors we have reconstructed hundreds of old tax returns.
Here is how the process of filing your back tax returns works.
a. If a taxpayer lacks income records the taxpayer should to the best of their ability reconstruct what they think their tax earnings were for each year.
They can do this simply by using a monthly averages for each of the years.
As an example, how much was one month of your rent or mortgage, your car expenses, your food, your insurance etc.
Arrive at a monthly figure and multiple it by 12. As a general rule your rent or mortgage is usually about 28% -32% monthly expenses.
b. If you have bank statements, what were your total deposits for the year? that maybe a start of your income.
The IRS agent will always add up the sum total of your bank deposits in attribute that to earn income.
c. Call the IRS and ask them for an income report record of all third parties that have reported to the IRS. Have no fear in calling the IRS and asking them for your tax records. This will not trigger any red flags.
The IRS keeps on their computer system a list of all third party sources that have reported 1099′s or W-2′s. The IRS will send this to you within a couple weeks of your request. IRS keeps this information on each taxpayer for the last seven years. Any third party who reported income to you will be listed on this income report.
d. Ask yourself, does this tax return make sense? Does the income tie into your style of living.
e. The Internal Revenue Service will want to make sure your financial fact patterns tie together.
They want to make sure your bank statements, your tax returns, your financial statement, in your cost-of-living all have a pattern. Simply by backing up into your cost of living one can simply find out how much income you need to pay those expenses. Make sure all of this ties together.
The IRS knows how much it costs to live in each area of the country. There are national averages of and you can find them on our website.
The tax return must reflect your living style and conditions over the period of time in which you are filing.
It is always best to let a professional tax firm handle this situation. The professional firms know the standards and the methods used by the IRS and if you owe tax, they can probably work out a tax settlement as well.
Not sure if you were suppose to file a tax return
If you are not sure you are required to file a return, refer to Publication 17, Your Federal Income Tax. You could simply go to the internal revenue site@IRS.gov.
There are certain income thresholds in which taxpayers are not required to file a tax return.
If you are required to file a return, but you cannot pay all of the tax due on your return, FST can be able to assist you with establishing a payment agreement.
If your tax return was not filed by the due date you may be subject to the failure to file penalty, unless you have reasonable cause for your failure to file timely.
- You may be eligible for abatement of penalty relief.
- There is no penalty for failure to file if you are due a refund.
If you wait to file a return or otherwise claim a refund, you risk losing a refund altogether. An original return claiming a refund must be filed within 3 years of its due date for a refund to be allowed in most instances.
You can lose possible tax refunds if you do not file
After the expiration of the three-year window, the refund statute prevents the issuance of a refund check and the application of any credits, including overpayment of estimated or withholding taxes, to other tax years that are underpaid.
However, the statute of limitations for the IRS to assess and collect any outstanding balances does not start until a return has been filed.
In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.
Contact us for a free initial tax consultation and we can help you through this process.
We have been in practice since 1982 in our A+ rated by the Better Business Bureau.
We are the affordable nationwide tax firm practicing in all 50 states including providing tax representation for international taxpayers.
Help with Unfiled, Delinquent Tax Returns – AFFORDABLE TAX COMPANY
by Fresh Start Tax | Oct 14, 2013 | Tax Returns
File Old Tax Returns
If you need to file to get back in the system worry free contact us today and we can walk through this process worrying stress-free.
If you will wind up owing back taxes as a result of filing old tax returns we can work out a tax settlement for you at the same time.
We can file your back tax returns and make a settlement with the IRS at the same time.
I am a former IRS agent in teaching instructor and our firm can help you through this process.
If you have not filed your old tax returns you are not alone.
There are million of taxpayers who failed to file their back tax returns but by not doing so taxpayers do themselves harm.
Some taxpayers can find themselves having:
- possibility criminal problems,
- losing your Social Security and Medicare benefits while others are
- losing money the IRS would be refunding to him because of withholding in tax credits.
If you have not filed your old tax returns in years there is a very specific process that you can walk through to get you back in the system worry free.
You need to find IRS before they find you to keep away from the any criminal problem the IRS may consider.
The process to get your back tax returns filed with the Internal Revenue Service is very simple and if you’re reading this you’ve already taken the first step to make that happen.
If you need to file back income tax returns but you have lost your tax records, a professional tax firm should easily be able to assist you in this process. The process is call tax reconstruction.
Being Former IRS agents,managers,and instructors we have reconstructed hundreds of old tax returns.
Here is how the process of filing your back tax returns works.
a. If a taxpayer lacks income records the taxpayer should to the best of their ability reconstruct what they think their tax earnings were for each year. They can do this simply by using a monthly averages for each of the years.
As an example, how much was one month of your rent or mortgage, your car expenses, your food, your insurance etc. Arrive at a monthly figure and multiple it by 12. As a general rule your rent or mortgage is usually about 28% -32% monthly expenses.
b. If you have bank statements, what were your total deposits for the year? that maybe a start of your income. The IRS agent will always add up the sum total of your bank deposits in attribute that to earn income.
c. Call the IRS and ask them for an income report record of all third parties that have reported to the IRS. The IRS keeps on their computer system a list of all third party sources that have reported 1099′s or W-2′s. The IRS will send this to you within a couple weeks of your request.
d. Ask yourself, does this tax return make sense? Does the income tie into your style of living.
e. The Internal Revenue Service will want to make sure your financial fact patterns tie together.
They want to make sure your bank statements, your tax returns, your financial statement, in your cost-of-living all have a pattern. Simply by backing up into your cost of living one can simply find out how much income you need to pay those expenses. Make sure all of this ties together.
The IRS knows how much it costs to live in each area of the country. There are national averages of and you can find them on our website.
The tax return must reflect your living style and conditions over the period of time in which you are filing.
It is always best to let a professional tax firm handle this situation. The professional firms know the standards and the methods used by the IRS and if you owe tax, they can probably work out a tax settlement as well.
Not sure if you were suppose to File? Check out this IRS pub.
If you are not sure you are required to file a return, refer to Publication 17, Your Federal Income Tax.
If you are required to file a return, but you cannot pay all of the tax due on your return, FST can be able to assist you with establishing a payment agreement.
If your tax return was not filed by the due date (including extensions of time to file), you may be subject to the failure to file penalty, unless you have reasonable cause for your failure to file timely.
You may be eligible for abatement of penalty relief.
There is no penalty for failure to file if you are due a refund.
But, if you wait to file a return or otherwise claim a refund, you risk losing a refund altogether. An original return claiming a refund must be filed within 3 years of its due date for a refund to be allowed in most instances.
You can lose possible tax refunds if you do not file
After the expiration of the three-year window, the refund statute prevents the issuance of a refund check and the application of any credits, including overpayment of estimated or withholding taxes, to other tax years that are underpaid.
However, the statute of limitations for the IRS to assess and collect any outstanding balances does not start until a return has been filed.
In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.
Contact us for a free initial tax consultation and we can help you through this process.
We can file all your back tax returns for the years you have not filed old tax returns and workout tax settlement if you are going to owe money.
Call us if you have questions, we are the affordable tax firm practicing nationwide tax relief.
File Old Tax Returns – Get back in the System Worry Free – Former IRS
by Fresh Start Tax | Oct 11, 2013 | Florida Sales Tax
Florida Sales Tax Audit Defense –Restaurants-Bars
Florida Sales Tax Auditors are Fishing for Revenue in Your Business
Florida Sales Tax Audit News – Bars and Restaurants
Insider Tips:
Beware: The Florida Department of Revenue knows the amount of Alcoholic Beverage and Tobacco Products you are purchasing from your distributor.
Frank Lamantia of FST should know, he was a Former Sales Tax Agent. He will tell you, Big Brother is watching.
Make sure you are truthful and accurate with Florida Sales Tax Auditors when revealing information to them because they already know about your purchases. You are not going to fool them.
The key insider tip is to understand that the Florida state sales tax auditor already knows your information before she/he even goes into your business.
It is critical that you give to them the exact records that are on file because they will know if you are trying disguise, hid, alter, or fail to give all the necessary documents and records.
Remember most of the Florida State tax auditors have audited hundreds of businesses in our experts in fishing for your business.
They know all the tricks of the trades for restaurants and bars. It is much better to pay the tax than to be involved in a criminal tax violation.
Reporting Requirements
Florida Department of Revenue – Reporting Requirement for Sellers of Alcoholic Beverage and Beverage and Tobacco Products to Florida Retailers
Every seller (manufacturer, wholesaler, or distributor of alcoholic beverage or tobacco products who sells to retail or in Florida) must submit a report electronically each year to the Department of revenue. This annual report is to on July 1 for the preceding reporting. It is late after September 30.
The report for state fiscal year 2012 – 13 must include sales to Florida retailers from July 1, 2012 to June 30, 2013. The report was due on July 1, 2013 and is late after September 30, 2013.
Sellers must submit the reports of electronically using the departments website. Each seller received a notice with their assigned user ID and password to access the system.
What are the reporting requirements?
Each report must contain:
· the seller’s name
· the sellers beverage license or tobacco permit number
· the retailer’s name
· the retailers beverage license or tobacco permit number
· the retailers address, including street address city, State, and ZIP Code
· the general item type, such as cigarettes, cigars, tobacco, beer, wine, spirits, or any combination of these items
· the net monthly sales total, in dollars sold to reach retail
Why Do Sellers Have to Report This Information
The Florida Department of revenue wants to find out if you are under reporting sales and use tax on alcoholic beverage and tobacco products sales.
Section 212.133, Florida statutes, imposes this annual reporting requirement on sellers of alcoholic beverage or tobacco products to Florida retailers. This information report will be used by the Department of revenue to identify Florida retailers who may be under reporting sales and use tax on alcoholic beverage and tobacco products sales.
For example the department will compare net wholesale sales of alcohol and tobacco products with the amount of sales and use tax reported and paid by the retailers.
Also as Stated in Florida Department of Revenue Tax Information Publication (TIP) No. 11A-01-04, dated June 17, 2011
Florida Department of Revenue Audit Representation for the Restaurant and Bar Industry
If you are going through a sales tax audit contact us today and speak to a former Florida sales tax agent, attorney, and Certified Public Accountants who could limit your exposure.
We are A+ rated by the Better Business Bureau and have been in practice in the State of Florida since 1982
With spending increases and cutting taxes there is only one way to balance the budget – Fishing for money through an Audit of Your Business.
The restaurant and bar industry, a major source of audit assessments will see an increase in audit activity to generate funds to cover the increased spending budget and the reduced taxes and fees.
Voluntary Disclosure:
If you have been under reporting or not reporting and you have not received a notice of audit, it is highly recommended that you contact our firm and we will assist your restaurant/bar in the process of going through a voluntary disclosure program to come clean now with the Florida Department of revenue, have most of the penalties waived and prevent it from becoming criminal.
Florida Tax Audit Help Provided to the Restaurant Industry
As An Insider – a former Florida State Sales Tax Agent – the following will explain to you some of the sales tax audit techniques used by the State of Florida Department of Revenue and the audit issues that will be targeted:
Methods of Operations for Restaurants and Bars
Restaurants
Restaurants range in size from small mom-and-pop operations to the national chains. All operate generally the same way, selling repaired food for consumption on or off the premises.
A large number of restaurants also operated lounges, in connection with the restaurant. These restaurants may operate in a number of different ways. Some serve alcoholic beverages with the food, as a part of the restaurant and some operated lounges that are completely separate operations from the restaurant. Some also offer entertainment and dancing, and a cover charge is sometimes imposed.
The primary statute related to restaurants is Section 212.08(1)(c), F.S., and the primary rule is Rule 12A-1.011 F.A.C.
Bar/Lounges/Package Stores
The operations of the bar will very they could sell prepared food and offer entertainment and dancing. They may also charge patrons a cover charge. The bar/lounge may also sell other items in addition to alcoholic beverages, such as picnic supplies, food, ice, T-shirts and a variety of party items.The bar/lounge and package store may be located in the same building but in different rooms. Separate cash registers may be used for the bar/lounge and package store, or sometimes the same register will be used for both operations.
Bars/Lounges
The dealer may record each sale and add the tax to the selling price. This results in the dealer reporting all taxes collected. The dealer may inform customers that the selling price includes the tax (putting them on notice). To do this, signs must be posted throughout the establishment that can be seen by all customers when ordering drinks. If the dealer selects this mess method, the tax to be reported will be calculated in the following manner:
Bars and/or cocktail lounge should divide their gross receipts by 1.0659, the result being the gross sales amount; the difference between the gross receipts amount in the gross sales tax amount should be reported as tax collected.
A combined bar and package store (operated as a single unit), which used the same method as bars and cocktail lounges.
An Example:
a bar has gross receipts of 32,585.50 including tax, and signs are posted. Therefore tax due would be computed as follows: 32,545.50÷1.0659 equals 30,533.35 gross sales… 32,545.50 less 30,533.35 = $2012.15 tax due.
The dealer may choose to set different prices that do not include tax and do not post signs to inform customers that tax is being collected, thus excluding tax from the price if this method is selected, the dealer would calculate and report the tax as follows:
· bars and or cocktail lounges should multiply their gross receipts by 0.0659 and report the results as tax due
· a combination bar and package store where the operations are not separated, which used the same method as the bar and cocktail lounge
· Example: no signs are posted in gross receipts are 32,545.50. Computation would be 32,505.50 x .0659 = 2144.75 tax due.
In this example, gross receipts are equivalent to gross sales because tax was not charged on the sale.
A bar or cocktail lounge may operate a packaged the bar/lounge offer drinks for consumption on the premises and the package store will offer package goods to take out.
Bars, Package Stores
Bars, package stores, and combinations that do not separately record the sales price and in tax are required to remit the tax on the percentage gross receipts. The applicable percentages are:
· 6.35% for package stores
· 6.59% for bars and bar/package store combinations
When the taxpayer can demonstrate that the customers had been informed that the price charged includes the tax, the gross receipts may be reduced by the amount of the tax (See Rule 12A-1.057, F.A.C.).
Package Stores
Facilities/Operations that do not sell by the drink for consumption on the premises will be considered a package store. These type operations offer only items to be taken out. In addition to alcoholic beverages, they will offer items such as picnic supplies, food, ice, T-shirts, hats and party items for sale.
The dealer may record each sale and add the tax to the selling price. This results and the dealer reporting all taxes collected
The dealer may inform his customers that the selling price includes the tax thereby putting them on notice. To do this, signed must be posted throughout the establishment that can be seen by all customers making purchases.
If the dealer selects this method, the tax to be reported will be calculated by dividing their gross receipts by 1.0635, the results being the gross sales amounted; the difference between the gross receipts amount in the gross sales about should be reported as tax collected.
The dealer may choose to set prices that do not include tax and not post signs informing customers that tax is being collected thus excluding tax from the price. If this method is selected, the dealer would multiply their gross receipts by 0.0635 and report result as tax due.
Florida Restaurants and Bars – Tax Audit Defense
We are a full-service tax firm that specializes in federal and State tax representation and are one of Florida’s most experienced for sales tax audit defense.
Our staff consists of tax attorneys, certified public accountants, former IRS agents and a former sales tax auditor with over 16 years of direct work experience with the Florida Department of revenue.
Feel free to contact us for initial tax consulting for Florida sales tax audit defense.
Florida Sales Tax Auditors are Fishing For Your Business – Restaurants ,Bars – Sales Tax Audits
by Fresh Start Tax | Oct 11, 2013 | Tax Help
It’s doubtful most people will notice, let alone celebrate, Friday’s 100th anniversary of the U.S. income tax code.
In 1913, the tax code consisted of 400 pages.
By 2012, the tax code was 73,608 pages.
It was the 16th Amendment, adopted in February 1913, that gave Congress the legal right to levy an income tax. On the evening of Oct. 3, President Woodrow Wilson signed the Revenue Act of 1913 that allowed the collection of a federal income tax.
We have Congress, the lobbyist’s , and all the politicians to thank for the United States income tax code.
The sad part of all this it cannot be read by the taxpayers who actually are paying tax to fund this entire operation.
