by steve | Jan 12, 2010 | Tax Help, Uncategorized
The following tips will help you choose a GOOD tax preparer who will offer the best service for your tax preparation and all your tax needs.
First of all, check on the person’s or company’s qualifications and find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics or conduct.
Check to see if the preparer has any questionable history. One of the ways to check is with with Better Business Bureau in your area, the State?s Board of Accountancy for CPAs or the State?s Bar Association for Attorneys. You can also use a search engine like google to see if there is any information on line about the preparer. You will find complaints on line many times. Find out about their service fees and especially avoid preparers that base their fee on a percentage of the amount of your refund or those who claim they can obtain larger refunds than other preparers. Some of these tax preparers will wind up in jail and your tax return will wind up being audited.
Make sure the tax preparer is accessible. Be sure you will be able to contact the tax preparer after the return has been filed, even after April 15th, in case questions arise. Many have email addresses and a web presence.
Provide all records and receipts needed to the preparer to complete your tax return. Most reputable preparers will request to see your records and receipts. They will also ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
Never ever sign a blank return and avoid tax preparers that ask you to sign a blank tax form.
Review the entire return before signing it. Make sure you review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it. If it is a joint tax return make sure the spouse is present with this as well. Also, make sure the preparer signs the form. A paid preparer must sign the tax return as required by law. Although the tax preparer signs the return, you are still responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
At last, ask the tax preparer if they will defend the tax return should the IRS chose to audit the it. If a balance is due, make sure the checked is stapled to the tax return.
by steve | Jan 11, 2010 | Tax Help, Uncategorized
How the IRS determines responsibility for trust fund cases. Call Fresh Start Tax we can Help, 1.866.700.1040.
A trust fund recovery case begins with unpaid 941 payroll taxes from a corporation. After some period of time, the IRS computer catches up with the unpaid 941’s on corporate cases. These cases are always sent to the field for an examination of the Trust Fund Recovery Penalty.
After a series of notices are sent out to the corporation, the case eventually works its way out to the field where an IRS Revenue Officer is assigned to it. After the Revenue Officer goes through necessary office checks, a field call is usually set up to visit the taxpayer at their place of business. After the visit, the Revenue Officer will normally make demand for the tax to be paid in full or work out some sort of payment plan. In most of these cases payment cannot be made in full to pay the IRS tax liability. In these situations, the Revenue Officer normally makes a decision that the best way to secure the governments interest is to make sure that the corporate officers who are responsible for paying the tax are set up with an individual liability to pay these 941 taxes. This is called setting up the trust fund liability.
These assessment become linked with the individuals. The assessments are made as though you would owe personal income tax. The code section that deals with this administrative procedure is Section 6672. Multiple individuals may be set up as responsible parties.
The revenue officer goes through a number of items to determine who is responsible. After 10 years on the job, it does not take a long time for the IRS Agent to figure this out. It is obvious who the responsible parties usually are.
Below are some of the check lists used.
Step#1 – Find out who is responsible to follow the money. That is who signed checks and who benefited from profits. The Internal Revenue Service is looking for who controlled the money. The IRS can ask the company to cooperate by asking for checks to review signatures. Or, the IRS can directly summons the bank to see who is on the bank signature cards and who signed the majority of the business checks. This usually points them in the right direction.
Step #2 – Who signed the 941’s, who is responsible for the preparation and signing of the tax forms. Anyone in the chain of events that had knowledge or authority may be held liable by the IRS. The fear of the IRS agent asking a companies staff questions can be very unnerving and the IRS agents on these types of cases are trained to get to the truth.
Step #3 – Who is really in charge. At the end of the day, someone is the decision maker. Who really is that. Who really controlled the operations of the company.
Step#4 – Who has the right to hire and fire. Whoever had this responsibility had a lot of influence in the company.
Step #5. – Who had the right to determine financial policy. In other words, who talked with the bank. The bank knows the true officers of the said corporation.
Step #6. – Who has the right to authorize all bills and pay other creditors. When you get to this point it starts to get real obvious who the responsible officers are.
Step#7 – Who had the right to open and close the bank accounts. Only the true officers of the corporation had this authority.
Step#8 – Who guaranteed or co-signed loans. Only someone who had a true vested interest in the company would want to do this.
Step #9. – Who authorized payroll. Even though this can be delegated to anyone, usually the responsible person has an interest in this function.
Step #10 – Who could sign the corporation’s tax return. This is true evidence of responsibility.
If the IRS does not find out who is responsible after this process, they will ask the neighboring businesses or the landlord. Usually, they all come up with the same person. By the way, whoever signed the lease, is usually a good choice. Another thing the IRS agent uses are the corporate resolutions found at the bank. The IRS also uses a Form 4180 which is collection interview form that is several pages of questions. Upon completion, the agent can make the determination easily.
As a former agent, everyone wants to blame the other person, a real who done-it. It is always someone else’s fault. A key tip for persons that might be be reading this is that if you are in trouble or heading that way, contact a professional to represent you. We at Fresh Start Tax are experienced in these types of IRS Cases. Another tip is if you are making tax payments, write on each check to IRS, “monies to be applied to trust-fund only”. If you do that, each payment will be applied to the trust fund tax and not go to penalties and interest. A final tip, if you do not like the revenue officers findings, you can always take your case to appeals.
If you are Involved in a Trust Fund Recovery Case, Call Fresh Start Tax at 1.866.700.1040 and Get the Help you Deserve.
by steve | Jan 11, 2010 | Tax Help, Uncategorized
The Processing Of Part Pay Agreements For Business Accounts and Application Of The Trust Fund Recovery Penalty.
When a business has an inability to pay delinquent and accrued taxes to the IRS, the following actions are taken by the Internal Revenue Service:
If a businesses has a hard time paying operating expenses and current taxes, then deferring action on delinquent and accrued taxes may serve no useful purpose. Appropriate collection action such as levy, seizure, or a trust fund penalty, will be considered to protect the IRS and the federal government’s best interest. The taxpayers interests must also be considered and the financial statement will be reviewed with the taxpayer to determine if there is a way to reduce expenses in order to make payment on the taxes and avoid enforced collection action.
When it is determined the taxpayer can pay current taxes as well as operating expenses, they will be required to pay the delinquent taxes. The taxpayer can then request an installment agreement.
When taxpayers are in business, are currently pyramiding trust fund taxes and have been repeatedly assigned to the collection field function for outstanding liabilities, then they are considered “repeaters.” These taxpayers may not be granted installment agreements. If, however, after contact, taxpayers originally classified as repeaters do not continue to accrue liabilities and begin making Federal Tax Deposits and file all appropriate returns (so that they are in compliance with all filing requirements); then, they are no longer considered repeaters and may qualify for installment agreements.
In-Business Trust Fund Installment Agreements Requiring Financial Analysis and Determining Ability to Pay
When Notices of Federal Tax Lien were not previously filed, a federal tax lien determination will be made on the taxpayer and or the business.
The IRS will verify current compliance with filing and deposit requirements of all required taxes including your personal income tax.
The IRS has a special procedure that they will consider for special deposits and monthly filings. These are usually on repeat offenders.
IRS will determine the taxpayer’s (business) ability to pay.
The IRS will secure Form 433B, Collection Information Statement for businesses and, if appropriate, Form 433A, for individuals. The IRS wants to determine if these in-business taxpayers can fully pay liabilities from current assets and or income. If they do not qualify for installment agreements full payment will be requested. The IRS will collect the monies from personal funds if available.
If the case is worked by a field agent the case will go through a very thorough review of all financial statements.
Trust Fund Recovery Penalties and Installment Agreements
The trust fund program is a priority for the IRS.
The IRS must ensure consideration is given to securing waivers to extend the statutory period for assessment from each responsible individual or individuals when the delinquent taxes will not be fully paid prior to the original statue.
The IRS will ask for waivers from responsible individuals and notify them of their right to refuse to extend the period of limitations, or to limit such extension to particular issues, or to a particular period of time. The IRS will seek to extend the statute if possible. Taxpayers will be notified of their right of refusal each time they are requested to sign a waiver extending the period for assessment.
The IRS will fully explain to the taxpayers that signature on a waiver, extending the period for assessment, will allow the Service to collect the delinquent and accrued taxes through an installment agreement which extends beyond the original Assessment Statute Expiration Date. This is not what you want at all!
On trust fund recovery penalties, no interest is charged until assessments are made.
Payments on Trust Fund Accounts During Approved In-Business Trust Fund Installment Agreements
Under the Trust Fund Recovery Penalty (TFRP) more than one entity or individual may be liable, or become liable, for the trust fund portion of liabilities. This is the federal governments way to collect the trust fund taxes from responsible individuals. Therefore, when businesses enter into installment agreements with the IRS the entities or individuals liable for the TFRP may prefer (and request that) the business’s payments be applied to the trust fund portion of the balance due accounts. If this occurs, the business should be notified that:
Installment agreement payment application is governed by the IRS and the terms of the agreement.
As stated on the agreement form: “We will apply all payments on this agreement in the best interests of the United States.”
Taxpayers are not permitted to designate installment agreement payments.
Installment agreement payments will be applied in the best interests of the United States, regardless of the policy to apply payments to tax first and then to penalties and interest when dealing with trust fund tax. This will vary from agent to agent. Professional help is needed here.
Individuals who are potentially responsible for the trust fund tax will be asked to make payments from their own resources. These payments are not considered to be installment agreement payments.
The local agent working this case is responsible for all determinations. That person is called a Revenue Officer.The following are possible applications of the trust fund taxes.
Example One
(1) Diaper Corp has not made a request for an installment agreement. Mr. Clinton, officer of Diaper Inc., tells the IRS revenue officer that he will pay $500 per month toward the trust fund portion of a tax liability with personal funds. The trust fund penalty has not been assessed as yet and Mr. Clinton has not yet been determined to be responsible for a trust fund recovery penalty. The balance due period or periods from which the liability was derived have not been specifically identified. Since the liability has not been identified this is not a pending installment agreement. Also, Mr. Clinton must be informed that any payments will be considered “voluntary”, and may be applied according to his instructions. Information regarding the contact must be documented in the case history.
Example Two
The same above scenario exists as above. Mr. Clinton has signed Form 2751 agreeing to the trust fund recovery penalty of Diaper Inc. As long as Mr. Clinton provides a specific payment amount this is a pending installment agreement. Note that the installment agreement is pending for Mr. Clinton’s trust fund recovery penalty, not for Diaper Corporations balances due on the back taxes.
Example Three
Football Inc. enters into an installment agreement requiring payment of $500 per month. The corporation does not make payments from corporate funds. Instead, corporate officers Ben and Jerry take turns designating payments of $500 per month with their personal funds on behalf of Football Inc. Although they write on their checks that the payments should be applied to the trust fund portion of the liabilities, these payments may be applied in the best interest of the government.
Example Four
Same as Example 3, except Football Inc. makes its monthly payment of $500 from corporate funds. In addition to the installment agreement payments made by the corporation, the officers make payments as described above. These payments, made in addition to the payments made by the corporation under the agreement, may be applied according to the officers’ instructions.
by steve | Jan 11, 2010 | Tax Help, Uncategorized
Many taxpayers get a tax refund from the IRS each year. However, if you owe tax, here are 10 free tips to deal with your problem.
Tip #1 – If you get a bill for late taxes, you are expected to promptly pay all the taxes owed including any additional penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan or borrow the funds to pay the bill in full rather than to make installment payments to the IRS.
Tip #2 – You can pay the the IRS with your credit card. Plus you get points by using your credit card. To pay by credit card contact either Official Payments Corporation at 800-2PAYTAX , www.officialpayments.com, Link2Gov, 888-PAY-1040 or www.pay1040.com. It is usually cheaper to owe the credit card company than Uncle Sam.
Tip #3 – The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Service. The IRS charges a failure to pay penalties which is in addition to the interest which makes paying the tax even tougher.
Tip #4 – You can also pay the balance owed by electronic funds transfer (EFT), check, money order, cashier’s check or cash. The IRS loves cash.(do not send cash by mail). To pay by using the Electronic Federal Tax Payment System call 800-555-4477 or 800-945-8400 or go online at www.eftps.gov.
Tip #5 – An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS for the collection of the amount due in equal monthly payments. To be eligible for an installment agreement, you must be current with the filing of all your tax returns and be current with estimated tax payments, if you do not have withholding. If the tax debt is over $25.000, the IRS will require a documented financial statement, Form 433-F, to be sent in and reviewed by an agent at one of the Service Centers.
Tip #6 – If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the web-based application called Online Payment Agreement found at IRS.gov. This is very simple and painless.
Tip #7. – You can also complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 -45 days whether your request is approved, denied, or if additional information is needed. If the amount you owe is $25,000 or less, provide the monthly amount you wish to pay with your request. If the monthly amount you request will pay the IRS debt in full within 60 months it will probably be allowed without completing a Collection Information Statement, Form 433A or F. IRS will require additional information if the debt takes over 60 months to pay off.
You may still qualify for an installment agreement if you owe the IRS more than $25,000, but a Form 433-F, Collection Information Statement, is required to be completed before an installment agreement can be considered. The 433-F is used by ACS Unit to determine your financial ability to pay. If your balance is over $25,000, the IRS will consider your financial situation and propose the highest amount possible. Fresh Start Tax can help negotiate your installment agreement, we will fight to get you the lowest payment possible based on your financial information.
Tip#8 – If an agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levels, a reduced fee of $43 will be charged. The reduced fee is automatically figured based on your income.
Tip #9 – Make sure your withholding is adjusted so you do not have the same problem in future years.
Tip #10 – Fresh Start Tax can answer any question you have regarding all your IRS issues.
by steve | Jan 11, 2010 | Tax Help, Uncategorized
Fresh Start Tax solutions to get your IRS Tax Levy released on wages and/or assets.
The IRS TAX LEVY ON WAGES, 668(W) or the levy on BANK ACCOUNTS 668(A) is the ultimate collection tool of the IRS. This is the IRS’s enforced collection mechanism where they will seize your wages and/or your assets for unpaid back taxes. Below are 10 ways you can legally release a tax levy with the IRS.
1. Pay the tax amount in full. If you can afford it, this is the easiest way of settling back taxes and getting a levy released. If you pay the tax amount owed in full, the IRS will immediately stop all collection actions against you or your company and the levy will be released or removed.
2. Let the Statute of Limitations Expire. The IRS has 10 years to collect taxes from the initial date of assessment. Once the 10 year period is up, they can no longer collect these taxes from you. Keep in mind that the IRS will try to extend this statute of limitations, so be aware of any papers they want you to sign. Also be aware that certain actions extend the statue of limitations, such as bankruptcy or the filing of an offer. If you have not paid the amount owed in 9 years, it is unlikely they will be able to collect from you in the last year. Certain factors influence when cases are sent back to the field. You can read our blogs to find out those factors.
3. Set up an installment agreement. An installment agreement is a payment plan with the IRS. This plan will allow you to pay off the IRS tax amounts owed over time. It usually is a 5 year period of time. It is important to make timely payments once the installment agreement is in place or the IRS can reissue the tax levy or levies.
4. Set up a partial payment agreement. This is similar to the installment agreement, but if you show you can legitimately not make the payments required for an installment agreement, the IRS will allow for smaller payments that may equal less than the original amount of tax owed. These are usually hardship type cases.
5. File an Offer in Compromise. If you meet the strict requirements for this type of relief, the IRS will release the levy. This is one of the hardest types of relief to receive from the IRS because it allows you to settle for far less than you owe.
6. Prove you have no equity in assets. If the assets the IRS are trying to levy have no equity in them, you must prove to the them that there would be no point for them to levy those assets. The IRS will gain nothing from levying them and it will not help pay anything towards your back taxes owed.
7. Prove you have a Financial Hardship. If you can prove to the IRS that the levy creates economic hardship. Some examples of a hardship could be that you are being evicted or have a medical problem that takes most of your wages or assets. If you qualify as a hardship it is likely the IRS will release or remove the federal tax levy.
8. Post a Surety Bond. If you post a surety bond, the levy will no longer be in effect. If a levy is in place, and you cannot pay your taxes, it is highly unlikely you will qualify for a bond. If you do qualify for a bond, you may be better off paying the tax amount owed in full. Your federal tax lien gets released as well.
9. Appeal the Levy. You can appeal an IRS levy and you will have a review if the Internal Revenue Service did not follow correct procedures.
10. File a bankruptcy. Bankruptcy settlement can release a tax levy by court order and return seized assets to you. This should be considered as a last resort. Your taxes must be 3 years or older, assessed for 240 days, and the returns must be filed for a two year period of time.
Fastest and easiest way to release a Levy is to call Fresh Start Tax today. We can get your situation taken care of FAST and get your life back in order, 1.866.700.1040.
by steve | Jan 8, 2010 | Tax Help, Uncategorized
So which is best for you? Thousands ask every year so here is the definitive answer.
The first thing you need to know. If you file electronically, the software automatically selects which is right for your individual case. Whether you use e-file or prepare on paper, using the simplest form will help avoid costly errors or processing delays. Remember, if you file electronically, it speeds up the processing of your tax return and the delivery of your refund. At some point everything will be electronic.
So here are your choices:
Use the 1040 EZ when:
Your taxable income is below $100,000
Your filing status is Single or Married Filing Jointly
You and your spouse ? if married — are under age 65 and not blind
You are not claiming any dependents
Your interest income is $1,500 or less
You are not claiming the additional standard deduction for real estate taxes, taxes on the purchase of a new motor vehicle, or disaster losses
You can use the 1040A if
Your taxable income is below $100,000
You have capital gain distributions
You claim certain tax credits
You claim deductions for IRA contributions, student loan interest, educator expenses or higher education tuition and fees
If you cannot use the 1040EZ or the 1040A, you?ll probably need to file using the 1040. You must use the 1040 if:
Your taxable income is $100,000 or more
You claim itemized deductions
You are reporting self-employment income
You are reporting income from sale of property
All IRS forms, instructions and information about e-file can be found on IRS.gov.
Remember, should you have any questions, please call Fresh Start Tax. We’re here to help you.
