by Fresh Start Tax | Mar 19, 2013 | Tax Help
IRS Employer, Business Tax Audit – IRS Tax Audit Help 1-866-700-1040
There is nothing worse than getting a dreaded letter from the Internal Revenue Service that says you have a business or employer tax audit.
But do not panic. If you feel you have a clean tax return there is absolutely nothing wrong with you going in to IRS by yourself.
IRS business and employer tax audit’s can be very lengthily and it will all depend on which division is conducting the tax audit. If your IRS business tax audit is being conducted by an IRS revenue agent you can expect a more lengthily tax audit, if it is being audited by any other group, the audit time can be very short lived.
A lot will also depend on the information items that IRS is requesting as to how complicated or lengthy to tax audit it will be.
Being a former IRS agent I would carefully choose who is to represent your best interest. We have helped thousands of clients throughout the years and can give you an affordable and sensible approach to help resolve your IRS business or employer tax audit. To learn more below see the information about IRS tax audits.
Top 4 Questions we will ask you.
1. Which division is Auditing your tax return,
2. What is your exposure,
3. What happens if the IRS goes back 3 years,
4. How confident are you of your tax return.
What is an IRS Business or Employer tax audit?
An IRS audit is a review or tax examination of an organization’s or individual’s accounts and financial information to ensure information is being reported correctly, according to the tax laws, to verify the amount of tax reported is accurate.
The IRS Business Tax Audit Selection Process
Selecting a return for audit does not always suggest that an error has been made.
Business Tax Returns are selected using a variety of methods, including:
- Random selection and computer screening. Sometimes returns are selected based solely on a statistical formula.
- Document matching.When payor records, such as Forms W-2 or Form 1099, don’t match the information reported.
- Related examinations.Tax Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.
Business Tax Audit Methods by the IRS
An IRS business tax audit may be conducted by mail or through an in-person interview and review of the taxpayer’s records. The interview may be at an IRS office (office audit) or at the taxpayer’s home, place of business, or accountant’s office (field audit). The IRS will tell you what records are needed.
IRS Tax Audits can result in no changes or changes. Any proposed changes to your return will be explained.
Business Tax Audit Notification
Should your account be selected for audit, you will be notified in two ways:
1. By mail, or
2. By telephone, no other methods are used by the IRS.
In the case of a telephone contact, the IRS will still send a letter confirming the audit. E-mail notification is not used by the IRS.
What your Rights During an Business Tax Audit
These rights include:
a. A right to professional and courteous treatment by IRS employees.
b. A right to privacy and confidentiality about tax matters.
c. A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
d. A right to representation, by oneself or an authorized representative.
e. A right to appeal disagreements, both within the IRS and before the courts.
IRS Business Audit Length
The length of each audit varies depending on the type of audit, the complexity of items being reviewed, the availability of information being requested, the availability of both parties for scheduling of meetings and your agreement or disagreement with the findings.Like I said before if your business tax audit is being conducted by an IRS revenue agent you can expect a much longer and more intense tax audit.
What Tax Records Needed for the Tax Audit
You will be provided with a written request for specific documents needed.
The law requires you to retain records used to prepare your return. Those records generally should be kept for three years from the date the tax return was filed.
The IRS does accept some electronic records. If records are kept electronically, the IRS may request those in lieu of or in addition to other types of records.
Contact your IRS tax auditor to determine what can be accepted to ensure a software program is compatible with the IRS’s.
Business Audit Determinations
An audit can be concluded in three ways:
1. No change: an audit in which you have substantiated all of the items being reviewed and results in no changes. Hooray!!!!!!
2. Agreed: an audit where the IRS proposed changes and the taxpayer understands and agrees with the changes.
3. Disagreed: an audit where the IRS has proposed changes and the taxpayer understands, but disagrees with the changes.
What Happens When You AGREE With The Audit Findings?
If you agree with the audit findings, you will be asked to sign the examination report or a similar form depending upon the type of audit conducted.
If money is owed, there are several payment options available. Publication 594, The IRS Collection process, explains the collection process in detail.
What Happens When You DISAGREE with the Audit Findings?
A conference with a manager may be requested for further review of the issue or issues. In addition, Fast Track Mediation or an Appeal request may be filed.
IRS Employer Tax Audits, Worker Classification
This new program will allow employers the opportunity to get into compliance by making a minimal payment covering past payroll tax obligations rather than waiting for an IRS audit.
This is part of a larger “Fresh Start” initiative at the IRS to help taxpayers and businesses address their tax responsibilities.
The new Voluntary Classification Settlement Program (VCSP) is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government. Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees.
The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as non-employees or independent contractors, and now want to correctly treat these workers as employees.
To be eligible, an applicant must:
a. Consistently have treated the workers in the past as non-employees,
b. Have filed all required Forms 1099 for the workers for the previous three years
c. Not currently be under audit by the IRS
d. Not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers
How to apply:
Interested employers can apply for the program by filing Form 8952, Application for Voluntary Classification Settlement Program, at least 60 days before they want to begin treating the workers as employees.
Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years.
Participating employers will, for the first three years under the program, be subject to a special six-year statute of limitations, rather than the usual three years that generally applies to payroll taxes.
IRS Business, Employer Tax Audit – IRS Tax Audit Help – Former IRS Managers
by Fresh Start Tax | Mar 19, 2013 | Tax Audit
IRS Tax Examination – Payroll, Employment Tax Audits – Former IRS Agents 1-866-700-1040
As a Former IRS Agent, I can tell you these are usually nightmare tax audits.
As a general rule IRS has received information that that an employer should have classified their employees under W-2 provisions. As a general rule the IRS does not random sample tax examinations for payroll, employment tax but usually has some solid evidence that a problem does exist.
It is in the best interest of the taxpayer, business, or corporation to get professional tax help to steer them through these tax audits simply because of the damaging results that can come out of the IRS findings.
As former IRS agents, managers, and tax instructors we know the exact strategies to use in your defense to help relieve you of any potential problems or issues.
IRS will use common-law factors to determine whether an employer should be deemed as self-employed or a true employee of the said company.
Please find below the law on these issues.
Should you have any questions contact us for a free consultation and we can review your specific case and issues that you have.
You will speak directly to a former IRS agent, certified public accountant, or a tax attorney. We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service.
As I mentioned earlier, do not take on these IRS tax examination audits for payroll and employment tax by yourself unless you have a clear-cut case. Also be aware that if you wind up owing IRS back tax dollars you will need a firm or a company to work out a tax settlement for you. we can handle the entire process.
As a last comment please be advised that IRS has a special audit group that only handles IRS tax examinations of payroll and employment taxes. This group is specifically designed to be IRS tax experts in the issue of employee employer business relationships.
Employee or Employer Test for IRS Tax Examinations for Payroll or Employment Tax Audits
The Internal Revenue Service Factors for Evaluation for Employee or Employer Test
There are two general tests the IRS uses for the determination for the Employment Tax Audits or Payroll Tax Audits
1. Common Law Test,
2. Reasonable Basis Test
Common law test for payroll tax audits or employment tax audits
a. Level of instruction.
If the company directs when, where, and how work is done, this control indicates a possible employment relationship. The IRS will look for training manuals and policies the companies use.
The IRS can use former employees to answer these questions as well.
Amount of training. Requesting workers to undergo company-provided training suggests an employment relationship since the company is directing the methods by which work is accomplished.
The more training, the Service takes the position that the individual is an employer.
b.Degree of business integration.
Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. Those whose services are for the production of income to a great level are scrutinized more closely.
Extent of personal services. Companies that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. In contrast, independent contractors typically are free to assign work to anyone. Once again this goes to control.
c.Control of assistants.
If a company hires, supervises, and pays a worker’s assistant, this control indicates a possible employment relationship. If the worker retains control over hiring, supervising, and paying helpers, this arrangement suggests an independent contractor relationship.
d. Continuity of relationship.
A continuous relationship between a company and a worker indicates a possible employment relationship. However, an independent contractor arrangement can involve an ongoing relationship for multiple, sequential projects.
Also, does the individual have another job or is this the sole source of their income. Is their license available to everyone?
e. Flexibility of schedule.
People whose hours or days of work are dictated by a company are apt to qualify as its employees. Does the individual punch a time clock or is the employee free to come and go? Does the person have a key to the facility?
f. Demands for full-time work.
Full-time work gives a company control over most of a person’s time, which supports a finding of an employment relationship. The IRS will look to see if the individual has other W-2 income.
g. Need for on-site services.
Requiring someone to work on company premises—particularly if the work can be performed elsewhere—indicates a possible employment relationship. Are name badges and uniforms required?
h. Sequence of work.
If the company requires work to be performed in specific order or sequence, this control suggests an employment relationship. Does the employee do the same thing every day?
i. Requirements for reports.
If a worker regularly provides written or oral reports on their the status of a project, this arrangement indicates a possible employment relationship. Is there an evaluation given?
Method of payment. Hourly, weekly, or monthly pay schedules are characteristic of employment relationships, unless the payments simply are a convenient way of distributing a lump-sum fee.
Payment on commission or project completion is more characteristic of independent contractor relationships. Time clocks tend to look like hourly employees. What does the tax return of the individual look like?
j.Payment of business or travel expenses.
Independent contractors typically bear the cost of travel or business expenses, and most contractors set their fees high enough to cover these costs. Direct reimbursement of travel and other business costs by a company suggests an employment relationship. Does the individual have a company credit card or expense account, how about a possible credit card of the company?
k.Provision of tools and materials.
Workers who perform most of their work using company-provided equipment, tools, and materials are more likely to be considered employees. Work largely done using independently obtained supplies or tools supports an independent contractor finding. The checking of the individual 1040 for a schedule C expense form is a good cross check for the IRS.
l.Investment in facilities.
Independent contractors typically invest in and maintain their own work facilities. In contrast, most employees rely on their employer to provide work facilities. Are there incentive programs for the individuals?
Realization of profit or loss.
Workers who receive predetermined earnings and have little chance to realize significant profit or loss through their work generally are employees. Is the individual on a pension system or health insurance?
m.Work for multiple companies.
People who simultaneously provide services for several unrelated companies are likely to qualify as independent contractors. That is why the individual tax returns may be checked.
Availability to public.
If a worker regularly makes services available to the general public, this supports an independent contractor determination. Does the individual have other business cards and is their business open to the public?
Does the person have other work going on at the same time?
n. Control over discharge or firing.
A company’s right to discharge a worker suggests an employment relationship. In contrast, a company’s ability to terminate or fire the independent contractor relationships generally depends on contract terms. Is there a contract between both parties.Does it contain accurate details?
o. Right of termination.
Most employees unilaterally can terminate their work for a company without liability. Independent contractors cannot terminate services without liability, except as allowed under their contracts.
Summary.
Remember, each case is based on each set of unique facts and circumstances. Call us today and we will evaluate your IRS tax examination for payroll and employment tax to find out exactly where you stand.
by Fresh Start Tax | Mar 13, 2013 | Tax Help
Tax Settlements with the IRS, Use Former IRS Settlement Officers 1-866-700-1040
We can settle for less if you qualify.do not be ripped off by other companies. As former IRS employees we know the law.
We are comprised of tax attorneys, tax lawyers and former IRS agents who worked and taught the IRS offer in compromise program which in fact is the tax debt settlement initiative.
As former IRS agents we taught tax law and instructed the new IRS agents how to work the tax settlement program.
We have worked hundreds upon hundreds of IRS tax settlements. as a result we know all of the IRS policies, procedures, and settlement initiatives.
We have over 60 years of working directly for the Internal Revenue Service in our firm has over 205 years of professional tax experience. We have worked on the local, district, and regional offices of the Internal Revenue Service
We are nationwide tax experts in IRS tax settlement.
Call us today for a free initial consultation and find out if you qualify for an offer in compromise.
Please understand that not every taxpayer qualifies for the tax settlement program that IRS offers. You should not pay a tax form any money whatsoever unless you know you are a qualified candidate for an IRS tax settlement. By calling us today we will go over your options and you can find out for yourself whether a tax settlement is in your future.
We have been practicing IRS tax representation since 1982 and we’re one of the most trusted firms for any IRS matter.
IRS Tax Settlements
Offer in Compromise, Tax Settlement allows you to settle your tax debt for less than the full amount you owe. It may be a excellent option if you can’t pay your full tax liability, or doing so creates a financial hardship.
The IRS must consider your unique set of facts and circumstances:
a. Ability to pay;
b. Income;
c.Expenses; and
d. Asset equity in all your assets including pension plans and IRAs.
Approvals of IRS Tax Settlement
The IRS will generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
The IRS will ask that you all other payment options before submitting an offer in compromise.
The Offer in Compromise /Tax settlements program is not for everyone. There are strict standards and that is why you must qualify before submission.
Make sure you are eligible for a Tax Settlement
Before the can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.
Submit your offer
You’ll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).
You can also view the “Complete Form 656” video.
Your completed offer package will include:
a. Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
b. Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
c. $150 application fee (non-refundable); and
Initial payment (non-refundable) for each Form 656.
Payment options for Tax Settlements
Your initial payment will vary based on your offer and the payment option you choose:
The Lump Sum Cash.
Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
Periodic Payment.
Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
Low Income Certification
If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer.
Understand the process of Tax Settlements
While your offer is being evaluated:
a. Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
b. A Notice of Federal Tax Lien may be filed;this varies from case to case,
c. Other collection activities are suspended; this could be liens and levies
d. The legal assessment and collection period is extended;
e. Make all required payments associated with your offer;
f. You are not required to make payments on an existing installment agreement; and
g. Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.
Call us today and we will review your current tax situation.
We will give you an honest appraisal whether you can qualify for an IRS tax debt settlement. When choosing any tax firm check on their Better Business Bureau rating and make sure they have former IRS agents or attorneys on staff.
Tax Settlements with the IRS, Use Former IRS Settlement Officers
by Fresh Start Tax | Mar 12, 2013 | Tax Help
Mortgage Debt Forgiveness, Everything you need to Know
Important Facts you should know about Mortgage Debt Forgiveness
If your lender cancelled or forgave your mortgage debt, you generally have to pay tax on that amount.
However, there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2012.
Here are key facts about mortgage debt forgiveness:
1. Cancelled debt normally results in taxable income.
However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.
2. To qualify you must have used the debt to buy, build or substantially improve your principal residence.
The residence must also secure the mortgage.
3. The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.
4. You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring.
You may also be able to exclude mortgage debt cancelled in a foreclosure.
5. You may also qualify for the exclusion on a refinanced mortgage.
This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing.
6. Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify.
7. If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Submit the completed form with your federal income tax return.
8. Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. Form 982 provides more details about these provisions.
9. If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year.
Tax Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.
10. Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form.
by Fresh Start Tax | Mar 12, 2013 | Tax Help
IRS Tax Attorneys, Lawyers – Levy, Wage Garnishments – IRS Tax Levy Relief 1-866-700-1040
We are comprised of IRS tax attorneys, tax lawyers, certified public accountants and former IRS agents, managers and tax instructors. While at the IRS we taught tax law.
We have over sixty years of directly working for the Internal Revenue Service in the local, district, and regional tax offices of the IRS.
We are tax experts and tax specialists in the field of IRS resolution, settlement and release of tax levies or wage garnishments releases.
Let our IRS tax attorneys, lawyers and former IRS agents get you tax relief from an IRS levy or wage garnishment.
Contact us for a free consultation today and see how easy the processes to get a wage or tax Levy garnishment release from the Internal Revenue Service.
The process of Levy or Wage Garnishment Relief
Any time a taxpayer owes back taxes, the IRS requires a financial statement before it will release or remove an IRS tax levy or the wage garnishment.
IRS will use a form 433-F. That form will help the IRS make these decisions. The financial statement will include all your assets, income and a list of your current tax expenses. You will need to verify all expenses that you put on the IRS financial statement. IRS will conduct a careful review of everything you put on the financial statement so make sure you are truthful on every thing put down on the form.
IRS will carefully review your financial statement.
IRS will either:
1. place you in a current economic tax hardship because your expenses are more than your income,
2. ask you to make installment payments or put you on a payment agreement,
3. or instruct you that you could be a possible settlement candidate.
By calling our firm not only will you get your tax levy or wage garnishment released we will also settle your case.
What is an IRS tax levy or wage garnishment
A IRS tax levy is a legal seizure of your property to satisfy a tax debt.
Levies are different from liens.
A federal tax lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt. A tax lien is usually filed at a courthouse closest to your residence or last known address.
If you do not pay your income or business taxes or make arrangements to settle your debt the IRS may chose seize and sell any type of real or personal property that you own or have an interest in.
IRS can seize and sell property that you hold such as your car, boat, or house or they
could levy property that is yours but is held by someone else such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions.
The Internal Revenue Service can seize almost anything unless it moves.The Internal Revenue Service only seizes homes or cars when cases are extreme. IRS has only seized 800 cars or homes for the entire fiscal 2012 year. IRS is not wanting to seize the assets belonging to taxpayers, IRS just wants taxpayers to contact them to resolve their tax issues.
These three requirements must be met before a Tax Levy:
1. The IRS assessed the tax and sent you a Notice and Demand for Payment,
2. You neglected or refused to pay the tax; (this is usually done by phone) and
3. The Internal Revenue Service sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy.
How the IRS must give you your Notice:
IRS has different options:
a. they may give you this notice in person,
b. leave it at your home or your usual place of business,
c.or send it to your last known address by certified or registered mail, return receipt requested.
Please note: if the IRS levies your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy. Call us for more details.
Levy Causing a hardship
If a levy on your wages, bank account or other property is causing a hardship you should contact us immediately.
If the IRS determines the levy is creating an immediate economic hardship, the levy may be released. Call us today and we can go over all your options.
Remember, a levy release does not mean you are exempt from paying the balance. penalties and interest will continue to accrue even if your case goes into an economic tax hardship.
Collection Due Process Hearing
You may ask an IRS manager to review your case, or you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a Collection Due Process hearing with the IRS office listed on your notice.
You must file your request within 30 days of the date on your notice. You may not ask for an appeal past the 30 days because it is in IRS policy that must be adhered to.
Some of the issues you may discuss include at your appeals hearing:
a. You paid all you owed before we sent the levy notice,
b. IRS assessed the tax and sent the levy notice when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
c.The IRS made a procedural error in an assessment and you have proof to show such an error,
d. The time to collect the tax (called the statute of limitations) expired before we sent the levy notice, ( the normal collection statute is 10 years from the date of the assessment),
e. You did not have an opportunity to dispute the assessed liability,
f. You wish to discuss the collection options, or
g.You wish to make a spousal defense. This could result in the filing of an innocent spouse claim.
We are comprised of IRS tax attorneys, tax lawyers and IRS tax specialist. Call us today for free tax consultation and here the truth. We offer affordable billing. We are A+ rated by the Better Business Bureau.
At the conclusion of your hearing, the Office of Appeals will issue a determination. You will have 30 days after the determination date to bring a suit to contest the determination. Refer to Publication 1660 (PDF), for more information. If your property is levied or seized, contact the employee who took the action. You also may ask the manager to review your case. If the matter is still unresolved, the manager can explain your rights to appeal to the Office of Appeals.
Levying Your Wages, Federal Payments, State Refunds, or Your Bank Account
If we levy your wages, salary, federal payments or state refunds, the levy will end when:
The levy is released,
You pay your tax debt, or
The time expires for legally collecting the tax.
If we levy your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS. To discuss your case, call the IRS employee whose name is shown on the Notice of Levy.
