by Fresh Start Tax | Aug 6, 2020 | Tax Help
Need To Write An IRS Appeals Letter, Former IRS Agent, Here is How You Do That
Thank God for the Appeals Function of the IRS, they can fix the wrongs of many bad decisions by IRS Agents.
The Agents that work in appeals are much more seasoned and as a whole has a great deal of common sense and I find them much more lenient that regular agents that may new newer or green and do not understand the flexibility that they have.
The real question, should you hire someone or do it yourself?
Answer: Depends on the size of the case and the issues at hand.
Its always best to speak to a professional but regardless,this is how you approach the appeals letter.
Michael Sullivan Fresh Start Tax Expert, Former IRS Agent
As a former IRS agent teaching instructor with the Internal Revenue Service and now being in private practice is necessary to understand how important the IRS appeals function is in dealing with your IRS problem.
In almost all facets in dealing with the IRS in both collections, audits and all other functions the appeals branch serves as an important instrument to help taxpayers mistakes, oversight and to let others see a new understanding regarding your case.
Therefore is critical to understand how important the appeals letter is in dealing with the issue.
Lets stat with the Office of Appeals’ mission statement:
“To resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.”
IRS Appeals proudly boasts independence as a core value & they really are.
Appeals offers a fresh, objective and impartial perspective and provides taxpayers a fair hearing that would otherwise often inefficiently clog up a court’s and taxpayer’s time and resources.
To take a case to Appeals, the taxpayer must protest in writing the IRS’s proposed action.
The written protest MUST contain the elements below:
The following in a written protest:
1. Your name, address and a daytime telephone number,
2. A statement that you want to appeal the IRS findings to the Office of Appeals,
3. A copy of the letter you received that shows the proposed change(s),
4. The tax period(s) or year(s) involved,
5. A list of each proposed item with which you disagree,
6. The reason(s) you disagree with each item,
7. The facts that support your position on each item,
8. The law or authority, if any, that supports your position on each item.
You must Add: The penalties of perjury statement as follows:
“Under the penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct and complete to the best of my knowledge and belief”
As well as your signature under the penalties of perjury statement
IRS practice tips to know and understand.
You should include as much information as you can in your appeals write up.
While most of you will not be a tax professionals in writing this, make sure it is concise, to the point so the appeals agent has a good understanding of why your appeal is being filed.
Let it contain as much factual information and documentation as possible.
Remember, documentation is king. You cannot over document.
Make sure your package is neat, orderly, and well put together.
If you can tab it and send it in a nice package all the better.
The appellate agent is going to stick to the facts of the case. You need to lay out every dispute possible and associated directly with what the IRS agent spelled out in your initial audit report.
The appellate hearing is a very informal hearing in which after that meeting you can still include more information.
Generally after speaking to the appellate officer agent he/she may give you some more time and information he/she may need to help your case and you can provide at the time requested.
If this is your first time doing this I would have third party look over it and review it.
To be perfectly honest with you, it’s best to have a tax professional put these this appeal together especially that it involves a large amount of money.
Call us today should you have any questions.
by Fresh Start Tax | Aug 5, 2020 | Tax Help
The Appeals Function of the IRS, they can fix the wrongs of many bad decisions by IRS Agents.
As a former IRS agent teaching instructor with the Internal Revenue Service and now being in private practice is necessary to understand how important the IRS appeals function is in dealing with your IRS problem.
In almost all facets in dealing with the IRS in both collections, audits and all other functions the appeals branch serves as an important instrument to help taxpayers mistakes, oversight and to let others see a new understanding regarding your case.
Therefore is critical to understand how important the appeals letter is in dealing with the issue.
It’s very simple, very compact and very easy to complete.
Here is the Office of Appeals’ mission statement:
To resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.
IRS Appeals proudly boasts independence as a core value.
Appeals offers a fresh, objective and impartial perspective and provides taxpayers a fair hearing that would otherwise often inefficiently clog up a court’s and taxpayer’s time and resources.
To take a case to Appeals, the taxpayer must protest in writing the IRS’s proposed action. The written protest must contain the element below:
The following in a written protest:
1. Your name, address and a daytime telephone number,
2. A statement that you want to appeal the IRS findings to the Office of Appeals,
3. A copy of the letter you received that shows the proposed change(s),
4. The tax period(s) or year(s) involved,
5. A list of each proposed item with which you disagree,
6. The reason(s) you disagree with each item,
7. The facts that support your position on each item,
8. The law or authority, if any, that supports your position on each item.
You must Add: The penalties of perjury statement as follows:
“Under the penalties of perjury, I declare that the facts stated in this protest and any accompanying documents are true, correct and complete to the best of my knowledge and belief”
ALSO:
Your signature under the penalties of perjury statement
IRS practice tips.
You should include as much information as you can in your appeals write up.
While most of you will not be a tax professionals in writing this, make sure it is concise, to the point so the appeals agent has a good understanding of why your appeal is being filed.
Let it contain as much factual information and documentation as possible.
Remember, documentation is king.
Make sure your package is neat, orderly, and well put together.
If you can tab it and send it in a nice package all the better.
The appellate agent is going to stick to the facts of the case. You need to lay out every dispute possible and associated directly with what the IRS agent spelled out in your initial audit report.
The appellate hearing is a very informal hearing in which after that meeting you can still include more information.
Generally after speaking to the appellate officer agent he/she may give you some more time and information he/she may need to help your case and you can provide at the time requested.
If this is your first time doing this I would have third party look over it and review it.
To be perfectly honest with you, it’s best to have a tax professional put these this appeal together especially that it involves a large amount of money.
by Fresh Start Tax | Aug 5, 2020 | Tax Help
IRS Help For IRS Tax Notices + Did you receive an IRS tax audit notice for supporting documentation for an earned income credit or another tax issue?
Call us today for a free initial tax consultation.
IRS has programmed their computers to generate IRS notice CP 75, RCP 75 a asking for supporting documentation for the earned income credit.
If you have received this IRS notice or letter please be advised of the following.
Here is the information you need to know:
a. At the top of the notice on the right side, we list the tax year that we’re auditing.
b. Any documents you send in need to cover the year we’re auditing.
c. Don’t send original documents. Only Send us copies.
The IRS Earned Income Credit Audit
The first item listed is the earned income credit.
Your package includes a Form 886-H-EIC that lists all the different documents you can send to prove you may claim the EIC with one or more qualifying children.
You can send any combination of these documents to provide the information the IRS needs.
Look at the Schedule EIC you filed with your tax return and complete the following steps for each qualifying child listed:
1. you must prove you lived with your child in the U.S. for more than half the tax year:
a. If your child lived with you at the address shown on your notice, you need to send a document showing your child lived at that same address for more than half the tax year.
b. If you moved and you and your child lived at another address, you must send documents showing the same address for both of you for more than half the tax year.
c. If your child didn’t go to school, you can send in copies of medical records or a statement from a daycare provider.
d. If you need to get a statement from your child’s school, daycare or medical care provider, you can find templates here. Your school or provider can copy and paste the template to their letterhead to make sure all the required information is provided.
e. Don’t forget to check the Form 886-H-EIC for more examples of documents you can send.
f. If you can’t prove your child lived with you for more than half the tax year, you cannot get the EIC.
You also must verify how you’re related to the child.
The child must be related to you in one of the ways listed on the Form 886-H-EIC.
The form gives examples of what to send to prove how you’re related.
If your child is age 19 years old or over, you must verify either that:
a. Your child was under age 24 and a full-time student for at least five months of the tax year (you can do this by sending copies of official school records), or
b.Your child is permanently and totally disabled (you can do this by sending a copy of one of the official documents shown on Form 886-H-EIC).
You must verify you, your spouse (if filing a joint return) and your child have a valid SSN:
a. To claim the EIC, you (and your spouse, if filing a joint return) must have a valid SSN issued by the Social Security Administration (SSA) by the due date of your 2019 return (including extensions).
b.Any qualifying child listed on Schedule EIC also must have a valid SSN by the due date of your 2019 return (including extensions).
You can only claim the EIC if your child lived with you for more than half the tax year in the United States. Your child must also be related to you in one of the ways listed on the Form 886-H-EIC, and be an eligible age.
Your child must meet all three of these requirements to qualify you for the EIC.
If you can’t show that your child meets all the requirements, you may still be eligible for the EIC without a qualifying child.
If you need any help during an IRS tax audit, former IRS agents who know the system.
by Fresh Start Tax | Aug 5, 2020 | Tax Help
Being a former revenue officer I can tell you there are generally two types of ways that revenue officers work “Trust Fund” cases.
At IRS you have a mixed bag of tricks of Revenue Officers who work for on cases.
I have pretty much categorize them into two different areas.
First, those who do their due diligence and come up with the correct assertion of who is truly responsible for the trust fund penalty,
Second, those who generally just throw a cast net and drag everyone in that they possibly can.
Looking at those who do their due diligence, these revenue officers look at the 4180s, look at the corporate resolutions, look at bank signature cards, look at who signed tax returns and try to narrow down the field to find out who was truly responsible for the trust fund tax.
They make sure those who are on the fringes do not have to go through the appellate process or possibly the assessment process of having to pay the trust fund tax liabilities.
The second area of those who just throw a cast net around every body. They review who signed bank signature cards, who signed tax returns, those who knew anything about the business and they will set up everyone who they possible can and try to shake down everyone and let the appeals division sorted it all out.
These are generally what I call the lazier revenue officers who shrug their responsibility.
They do not do their proper due diligence and do not take a true look at the situation and realize how much damage and money it cost for people to make a tax defense against the trust fund.
Tax Tip :If you run into type II those who throw a cast net around everyone, make sure you speak to the group manager and state your case to help alleviate the trust fund penalties around your clients addiction situation exist.
by Fresh Start Tax | Aug 4, 2020 | Tax Help
Trust fund penalties can be assessed against responsible parties who should have turnover the withholding and Social Security taxes to the government on 941 taxes, did not, and IRS deemed those individuals responsible under the willful standards.
The Internal Revenue Service has a number of things that they look at before they set up the trust fund taxes against those responsible for the 6672 penalty.
One of the biggest things IRS looks at is “willfulness” and who those should have paid over the taxes but failed to do so.
That willfulness standard is a hinge point on what IRS looks for.
Many times the willful standards need to be clarified so a person knows what they’re up against in dealing with the Internal Revenue Service or the Appellate Division.
Under The IRM 8.25.1.3.2 (12-07-2012) the current protocols are as follows:
Definition of Willfulness
1. The trust fund recovery penalty is a civil penalty; so the degree of willfulness in failing to collect or pay over any tax leading to liability for this penalty is not as great as that necessary for criminal proceedings.
Willfulness in the context of the TFRP is defined as intentional, deliberate, voluntary, and knowing, as distinguished from accidental. “Willfulness” is the attitude of a responsible person who with free will or choice either intentionally disregards the law or is plainly indifferent to its requirements.
Some factors to consider when determining willfulness are:
• Whether the responsible person had knowledge of a pattern of noncompliance at the time the delinquencies were accruing;
• Whether the responsible person had received prior IRS notices indicating that employment tax returns have not been filed, or are inaccurate, or that employment taxes have not been paid;
• The actions the responsible party has taken to ensure its Federal employment tax obligations have been met after becoming aware of the tax delinquencies; and
• Whether fraud or deception was used to conceal the nonpayment of tax from detection by the responsible person.
Here is the instruction which the district judge gave:
Liability is imposed on a responsible person, under Section 6672, only if the person willfully fails to collect, account for, or pay over withheld taxes.
“Willfulness, ” within the meaning of Section 6672, requires a voluntary, conscious and intentional act to prefer other creditors over the United States. Liability does not depend on the presence of an evil motive or specific intent to deprive the government of revenue.
In fact, conduct motivated by a reasonable cause may, nonetheless, be willful.
Rather, a responsible person acts willfully whenever he permits funds of the corporation to be paid to other creditors when he is aware that withholding taxes due the government have not been paid.
In other words, when a responsible person does not use his authority to see that the withholding taxes are paid, but rather permits the corporation to continue its operation, paying suppliers and other creditors, his conduct is willful.
Further, even in the absence of express knowledge of a default and payment of withholding taxes, willfulness, for the purpose of Section 6672, exists where a responsible person pays other creditors with a reckless disregard as to whether trust fund taxes have been paid over to the government.
For this purpose, recklessness is established if the party, first, clearly ought to have known that; second, there was a grave risk that withholding taxes were not being paid, and if, three, he was in a position to find out for certain very easily.
Recklessness is also established if a responsible person fails to investigate or correct mismanagement after being notified of a default in the payment of withholding tax.
Need help with any IRS matter, free consults available.
by Fresh Start Tax | Aug 4, 2020 | Tax Help
The Schedule C IRS Tax Audit, we can take the pain out of this IRS tax audit.
On staff are former IRS agents, CPAs and tax attorneys. We have handled thousands of cases. If you have any questions we are happy to answer about any tax audit you are going through.
Schedule C audits can be easy or very painful and believe it or not at all depends on the agent who works the case and how picky, sticky or how much they want to delve into the case.
Some IRS audit agents want every last piece of documentation and others are much more relaxed & understanding about the situation and may just want averages.
The agent you have is in a control of the case and the volume of information that they want.
Also, keep in mind the auditor can go back three years if they choose and ask for the current year to be filed to review that as well.
WHAT IS IRS ASKING FOR?
If your notice lists Schedule C (Form 1040 or 1040-SR) (PDF) income, look at Form 11652, Questionnaire and Supporting Documentation, Form 1040 or 1040-SR Schedule C (Profit or Loss from Business).
It lists the documents you must send that support the income and expenses claimed on your Schedule C. Documentation is king.
You should eview each line of this form and make sure you correctly answer every question.
Return the Form 11652 with the requested supporting documents, such as copies of your business records, Form 1099-MISC and your business license.
It is important to keep all documents used to complete your tax return.
The documents kept should include:
1.records supporting the income,
2.expenses, deductions or credits you claimed, such as invoices, receipts, mileage logs, and,
3.checking account statements showing amounts paid, and any other proofs of payment.
Make sure your records should be well-organized to answer any questions when your return is selected for audit.
The records supporting items on your tax returns should be kept for at least three years after filing your return. IRS can go back 3 years if they chose.
You must send copies of your records that show the gross receipts and business expenses claimed on your Schedule C.
What are Gross receipts? They are the total income from your business.
Proof of your gross receipts includes cash register tapes, bank statements, bank deposit slips, receipt books, sales invoices, credit card charge slips, and Forms 1099-MISC.
IRS will want all Business expenses. Business expenses are the costs paid to carry on your business and proof of your expenses includes canceled checks or checking account statements which clearly show the expenses paid, cash register tapes, account statements, credit card sales slips, and invoices.
After you complete your response, look at the Form 11652 to make sure you included all the necessary information.
Need help, call us today.
