IF YOUR BUSINESS OWES EMPLOYMENT BACK TAXES - WHAT YOU SHOULD KNOW!

Employment taxes, Form 433B, Revenue Officers, Trust fund recovery penalty

Unpaid employment tax liabilities results in the highest level of IRS enforcement.  The IRS usually assigns its most experienced Revenue Officers to investigate employment tax cases, including pursuing the individuals in the business personally for not paying their employees taxes.

If your business owes employment taxes to the IRS, what does this mean to you and where does it lead?

Let’s break it down – 10 tips on what to expect from the IRS, and how to handle the IRS scrutiny.

1.     Yes, the IRS will make an unannounced visit to your business.  Be respectful and courteous.  This the Revenue Officer’s first impression of you – make it count.  Build credibility and confidence with the Revenue Officer.  You do not have to make any promises or statements, but be sincere.  Tomfoolery will get you nowhere.

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2.     You do not need to offer explanations, talk at length, provide documents or financial statements at the first visit.  Expect open-ended questions.  You can tell the Revenue Officer you will be getting professional assistance to solve your problem, and your representative will contact him, and respond to questions and provide all requested information.

4.     You do not have to let the Revenue Officer past a lobby area or into the business.  There is no right to tour your business or view your assets to see what you have unless (1) you voluntarily agree or (2) the Revenue Officer has a court ordered writ of entry permitting him to take a walk-through (it would be rare for a RO to have a writ of entry on a first visit).

5.     The IRS cannot take your bank accounts and customer receivables until 30 days after a Final Notice of Intent to Levy is issued.  In many cases, the Revenue Officer will hand-deliver the Final Notice during the first visit.  This notice is important – it gives you important appeal rights to resolve your case without the threat of levy with an IRS settlement officer instead of an enforcement officer.

6.     The Revenue Officer wants to set deadlines and move the case forward.  He will want unfiled returns, an IRS financial statement (Form 433B), and proof that you can make your employment tax deposits and stop the problem.  He will send you Form 9297, Summary of Taxpayer Contact listing what he wants and when.

7.     Revenue Officer deadlines are dead serious – miss them and risk levy action or an IRS summons compelling your cooperation.  If you cannot make a deadline, it is important to let the Revenue Officer know in advance, not at the last minute, to ask for an extension in good faith.

8.     As you have been pyramiding employment taxes, Job #1 is to stop the bleeding.  Immediate procedures have to be put in place to find the money to make the deposits.

9.     Expect the Revenue Officer to start an investigation of the business for the trust fund recovery penalty.  The IRS is looking for those in the business who were part of the decision not to pay the withholding taxes to the IRS.   The Revenue Officer will want to interview people in the business to see what they know, and subpoena bank records to see who signed checks (directed payment of bills).  The interview presents its own set of issues to deal with, including whether to submit to it all and if so, knowing the questions to be asked ahead of time.

10.    The IRS tends to cast a wide net when pursing the trust fund recovery penalty against business owners.  You have appeal rights to dispute if you disagree.  Until appeal rights are exhausted, the IRS cannot collect the trust fund taxes from you personally.  But you may be asked for a personal financial statement (Form 433A).  But remember at the investigation stage, you do not personally owe the IRS anything yet, so consideration should be given to deferring.

Employment tax liabilities involve multiple defenses (business, individuals) and many twists and turns.  Knowing what is coming and being prepared helps plan for successful resolution.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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HOW TO AVOID IRS MATCHING NOTICES AND IRS CP 2000 NOTICES

CP 2000 Notice, Tax Relief, Examination Notice

How to Avoid an IRS Matching Notice

Every year, millions of Americans get mail from the IRS that they did not expect.

Sometimes it’s a simple matter and one you can figure out easily. Other times, IRS notices can be confusing or even incorrect. Your best bet is to try to avoid the notice in the first place. To increase your chances of avoiding an IRS notice, here are five actions that will work in your favor.

1. REPORT AMOUNTS ON THE CORRECT LINE

Since IRS notices (for example, the CP 2000 Underreporter notice) can be computer-generated, many are the result of a too-precise matching system. Even if you report all income on your return, the IRS system may generate a notice if the income was reported incorrectly.

For example, taxpayers commonly report non-employee compensation from a 1099-MISC as “Other Income,” when it actually belongs on the Schedule C, Profit and Loss from a Business.

Make sure that amounts are reported in the correct category that matches the line item on your tax return. For more information about income reporting see IRS Publication 525, or better yet, see your tax pro.

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2. DON’T GROUP INCOME AMOUNTS

It may be tempting to combine amounts to simplify your tax return and save yourself time. Don’t. This is not how information gets reported to the IRS. This is another way to trigger an IRS notice because IRS systems are looking for an exact match. So, if you worked several jobs this year, you’ll need to enter each W-2 separately in your tax software.

As another example, let’s say you have multiple stock trades on your Forms 1099-B. You must report each trade separately by either:

Including each trade on Form 8949, which transfers to Schedule D, or
Combining the trades for each short-term or long-term category on your Schedule D. Include a separate attached spreadsheet showing each trade. The spreadsheet must include the same information requested on Schedule D.

3. INCLUDE ANY DELAYED OR CORRECTED PAYER DOCUMENTS

If you receive any correcting information statements, like a corrected W-2 or 1099, make sure that you notate that on the return (tax filing software has a checkbox for this). If you receive a corrected statement after you have filed your tax return, amend your tax return and include the corrected statement as an attachment.

In some cases, you may be waiting on a delayed or corrected information statement. File an extension and pay any tax you estimate you’ll owe by the filing due date (not the extension date) to avoid costly penalties and interest.

If you want to make sure you have all of your information statements, file an extension and contact the IRS in late July to get your wage and income transcript. It may contain W-2s and 1099s that you were not aware of.

4. IF PAPER FILING, INCLUDE ALL SCHEDULE AND INFORMATION STATEMENTS.

When you or your tax pro e-file your return, electronic copies of your information statements (W-2, 1099, etc.) and your Form 1040 Schedules (Schedule C, Schedule A, etc.) are sent with your return. However, when mailing your return, you must attach copies of these documents.

You don’t need to send in copies of your receipts or other records, but these should be kept for at least three years in case you are audited.

5. DON’T NET AMOUNTS

Use gross income amounts unless it specially requests the net amount. Do not net amounts due or paid to other sources against amounts due or received from them.

Best course: Be upfront

When the IRS thinks you did not report all of your income, they will send you a notice. Notices can be confusing, so if you don’t understand exactly why the IRS sent you a notice, call the IRS or look closer at your tax account. Start with the phone number on the notice. You can also get a tax pro to help determine whether the IRS was correct and help respond with the information the IRS needs to correct the error.

Other issues can come up, even after the IRS has processed your return and issued your refund. Always open IRS letters right away and respond by the due date to get the best outcome. Find out how to handle a IRS CP2000 Notice.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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LOOK INTO BACK TAX PENALTY RELIEF BEFORE PAYING PENALTIES ON BACK TAXES.

Small Business, Tax Abatement, Penalty Relief, Tax Attorneys, Tax Relief Houston

The IRS doesn’t abate the vast majority of penalties. Why? Probably because people don’t know to ask for penalty relief – or it may seem lik­e it’s not worth the time or effort. Here’s why it is worth it.

The IRS uses penalties to encourage us to follow the rules and remain in compliance – and it uses them a lot. Each year, the IRS assesses tens of millions of penalties totaling billions of dollars. But the IRS also provides several options to get penalties removed, or abated, for people who qualify.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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www.advancetaxrelief.com
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The most common IRS penalties are for not filing and not paying
There are almost 150 penalties in the Internal Revenue Code, but a few common penalties make up 74% of all penalties. The most common penalties are:

Failure to pay penalty – 56% of all penalties, imposed if you don’t pay taxes on time
Failure to file penalty – 14% of all penalties, imposed if you don’t file a return on time
Failure to deposit penalty – 4% of all penalties, imposed if a business doesn’t pay employment taxes on time, or pays them incorrectly

A frequently encountered nuisance penalty is the late-filing penalty for partnerships and S corporations. The estimated tax penalty is another common penalty that taxpayers often dispute by providing an exception when filing the tax return.

Reasons the IRS will remove penalties
You can request penalty abatement for the most common penalties using four reasons:

1. Statutory exception: proving a specific authoritative exclusion to the penalty
Statutory exceptions are uncommon and are easily explained to the IRS, mostly at tax filing. Examples include disaster relief or combat zone relief.

2. IRS error: documenting that the error was the result of reliance on IRS advice
This penalty relief argument is typically unsuccessful and isn’t used much. You must have documented erroneous advice from the IRS that you reasonably relied on, and the IRS doesn’t routinely put tax advice in writing. The Internal Revenue Manual states that the IRS also allows penalty relief based on erroneous oral advice, but in practice, this is rarely seen.

3. Reasonable cause: providing a valid reason that you couldn’t comply based on your facts and circumstances
More commonly, people try to argue that they relied on the erroneous guidance of their tax software or tax professional. This type of argument falls under reasonable cause.

To successfully present a reasonable cause argument for late filing and payment, you must demonstrate that you exercised ordinary business care and prudence but couldn’t comply. You must also demonstrate that your noncompliance was not due to willful neglect.

Most people haven’t traditionally been successful with reasonable cause arguments before the IRS, especially in court. In reality, most penalty abatement determinations never get to court. Most are administrative determinations made by the IRS.

To be successful in reasonable cause determinations, you’ll need to make sure that the IRS considers all your facts and circumstances. If you get a penalty abatement denial letter that doesn’t seem to address all the facts and arguments presented in your penalty abatement request, should request an appeal of the determination.

4. Administrative waiver: taking advantage of a provision that facilitates effective tax administration

The IRS can provide administrative relief from a penalty under certain conditions. The most widely available administrative waiver is first-time penalty abatement (FTA).

FTA can be used to abate the failure to file, failure to pay, and failure to deposit penalties for one tax period when you have a clean compliance history for the past three years. You can use FTA for penalties on Form 1040, Form 1120, and payroll and pass-through entities.

FTA is the easiest of all penalty relief options. You can request it by calling the toll-free number on your IRS notice, or your tax professional can call the dedicated tax pro hotline or compliance unit (if applicable) to request FTA for any penalty amount.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#TaxDebtProblems #FilingBackTaxes #TaxReliefPrograms #IRSDebtForgivenes #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes #OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

WAYS TO PAY YOUR BACK TAXES

In 2016, about 29 million people filed their returns and owed taxes. Many people just pay the balance when they file – online or by check.

But what if you can’t pay in one lump sum?

You’re not out of luck. Here are three options.

1. Borrow the money.
This is a great option if you have someone willing to loan you the money, especially with no interest.

2. Pay with a credit card.
You may think about using a credit card now and paying off the balance over time. After all, you’ll get the points. But with some credit card interest rates topping 20%, it’s worth doing some extra math.

3. Work with the IRS.
Not everyone knows that the IRS will work with taxpayers who owe. Here’s more about the options you may have.

Ask for a little more time
If you just need more time to get the money together, you can ask the IRS for an extension of up to 120 days to pay your entire tax bill. Penalties and interest will accrue until you pay the full tax bill.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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Set up a payment plan
If paying your entire bill upfront isn’t an option, the IRS offers several types of alternatives – like monthly payment plans (called installment agreements).

And the penalties and interest the IRS charges on your tax balance may not be as high as you think.

Here’s why.

As of January 2018, the IRS charges a 4% interest rate on unpaid back taxes. The penalty for not paying (called the failure to pay penalty) is ½ percent per month, maxing out at 25% of the amount you owe for each tax year with a balance. In short, the annual cost would be 10% of what you owe (4% interest rate, plus 6% total penalty for the year).

But if you get into a payment plan with the IRS, you can lower your costs. The IRS will cut your failure to pay penalty in half – to 0.25% per month. This lowers your annual cost to about 7%.

The IRS offers several types of installment agreements, and even has options for people in hardship situations. Learn how to set up an agreement with the IRS to pay your taxes.

What not to do: Ignore it
Do the math if you owe taxes and can’t pay right away. You’ll need to decide what’s best for your situation.

But remember: The one thing not to do is ignore it and hope the issue goes away. If you don’t make arrangements with the IRS on your tax bill, the failure to pay penalty rate can double — to 1% per month when the IRS starts collection proceedings against you (with actions like liens and levies).

The moral of the story: File on time and work out an arrangement with the IRS for your outstanding tax balance. The sooner you do it, the less you’ll pay in the end.


GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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I’VE NOT FILED MY BACK TAXES WITH THE IRS, I’M EXPECTING TAX REFUNDS. WILL I BE IN TROUBLE?

Small Business Back Taxes, Revenue Officer Help, ACS Collections, Tax Debt Help

What if you have not filed your taxes in years, but have paid taxes to the IRS all the while? In other words, you have back taxes, but probably do not owe the IRS much of anything because your employer took taxes out of your paycheck. How much trouble could you be in with the IRS?

The good news is you likely are not in much trouble at all if you have not filed and do not owe any money to the IRS.

Here’s why:

You are not going to jail for not filing the tax returns.  The IRS likes to prosecute people who do not pay their taxes.  That’s not you.  You paid your taxes, but just did not file your returns.  There is a difference, and the difference takes you out of any IRS criminal exposure.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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No IRS any penalties for not filing your returns. Common penalties are for late-filing, late-payment, and not making estimated tax payments. The amount of the penalties can be as much as 20-25% of the tax owed on the return. The key here is the phrase tax owed on the return.  You had withholding, paid your taxes, and do not owe any tax on your returns.  Since the penalties are calculated on money owed, you will not owe the IRS any penalties – even for not filing the return on time.


There will be no interest charged to you.  The IRS likes to charge interest – but it needs money owed to calculate the interest charges on.  If you do not owe the IRS, and have a refund on the returns, regardless of how long it has been since they were to be filed, you will not owe the IRS any interest.

No IRS levy or property seizures.  The IRS can’t take your stuff if you do not owe them money.  If they are trying to take your stuff, the original returns need to be filed so the IRS knows there are no balances due and you have refunds.  Any levies should then be immediately released.
You do not have to go back forever on the unfiled returns.  There is a limit on how far back you have to go to get in compliance with your filings.  You do not have to go back forever. In most every case, filing the past six years’ tax returns will bring you into the IRS’s good graces.  See IRS Policy Statement 5-133 and Internal Revenue Manual 4.12.1.3.


You may be off the IRS’s grid.  The IRS may not even be looking for your returns.  You may not even be on the IRS’s radar.  Here’s why:  Your employer reported your earnings and tax withholdings to the IRS.  The IRS’s computers know what you have earned, and that you have not filed.  But the computers may also see that you had enough withholding, and if you filed, the IRS would owe you.  And guess what?  The IRS does not notify you when they think that they owe you money.  The IRS only comes after you when they think you owe them.
Here is some so-so news that can be turned into good news:

The IRS may owe you money on those unfiled returns, and they can pay it to you if you get the returns filed.  And you want that money.  But for the IRS to pay it to you, you need to get those returns filed.  The IRS won’t pay you unless you file.  Filing the returns with refunds leads to good news. 

If the IRS owes you, and you have not filed, they will pay you the refunds for the last three years.  And they will pay you interest on those refunds.  Unfortunately, the Internal Revenue Code prevents the IRS from paying you a refund that is more than three years old.
You may have received a bill from the IRS stating that you owe money to them for the years you did not file.  This may be wrong, but the IRS can do this – estimate your liability when you don’t file, and bill you for it.  The technical IRS term for it is a Substitute for Return, with the acronym SFR. 

When you don’t file, and the IRS files for you, they often get it all wrong. The IRS will not give you the correct filing status, the right tax rates, will usually allow no dependents, and will not give you a deduction for mortgage interest, or charitable contributions, or employee business expenses, or your business expenses if you are self-employed.

An IRS substitute return can be corrected by preparing the original returns and filing them with the IRS.  In most every case, the IRS will accept the right numbers – yours – and allow you all the deductions you are entitled to.  The result is the IRS changing your return from a balance due to a refund, or at the very least, to a smaller, correct amount owed.

In summary, if left to their own devices, the IRS may determine that you are owed money, and never pay it to you if you do not file your returns.  Or they may incorrectly think that you owe them money, make a substitute return filing, and bill you for it.  Preparing and filing past due tax returns can not only get you the refunds, but correct erroneous IRS actions in estimating your taxes.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#TaxDebtProblems #FilingBackTaxes #TaxReliefPrograms #IRSDebtForgivenes #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes #OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

YOU CAN AMEND A TAX RETURN? HOW TO FIX AN ERROR

Filing your taxes is one of those projects that may feel overwhelming. It can be almost intimidating when you get to the end and have to press that final button to file your return. Here is some information to help put you at ease if you make a mistake.

For almost any kind of error, know this: it is fixable. You can file an amended tax return to correct errors and still go back three years to claim an additional refund if you missed a credit or deduction.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

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What is an amended tax form?

Most individual tax returns can be amended by mailing in a Form 1040X. This form amends a previously filed Form 1040, Form 1040A, or 1040EZ Forms.

You can use this Form 1040X if there are changes in your filing status, income, credits or deductions. (Read more about common mistakes taxpayers make, and how to avoid them.) The IRS does recommend that you wait until you get your original refund before you submit an amendment. Don’t worry – the amended return deadline is generous, so you should have plenty of time to wait on your refund and still file your amendment. Usually, you have three years to file an amended return.

How and when can I amend my tax return?

You’ll need to send an amended return by mail. You can access the Form 1040X on the IRS website. Check the Form 1040X Instructions to find your state’s IRS Service Center address. Or, of course, Advance Tax Relief can help you file an amended return.

As for when to amend your tax return, that part is easy. If you’ve already filed your 2018 return, you’ll be able to file an amended return. If you filed your original return before the normal tax deadline (usually April 15) and find an error that would make you owe more money, you might want to hurry. If you file your amendment before the normal tax due date, you can avoid penalties and interest.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

#TaxDebtProblems #FilingBackTaxes #TaxReliefPrograms #IRSDebtForgivenes #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes #OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

LOOK INTO PENALTY ABATEMENT RELIEF BEFORE PAYING YOUR IRS BACK TAXES

Small Business Taxes, Penalty Relief, Back Taxes, Tax Attorneys

The IRS doesn’t abate the vast majority of penalties. Why? Probably because people don’t know to ask for penalty relief – or it may seem lik­e it’s not worth the time or effort. Here’s why it is worth it.

The IRS uses penalties to encourage us to follow the rules and remain in compliance – and it uses them a lot. Each year, the IRS assesses tens of millions of penalties totaling billions of dollars. But the IRS also provides several options to get penalties removed, or abated, for people who qualify.

NEED HELP WITH IRS BACK TAXES, AUDIT REPRESENTATION OR SMALL BUSINESS TAX PREPARATION?

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
BBB A+ RATED
CALL (713)300-3965

The most common IRS penalties are for not filing and not paying
There are almost 150 penalties in the Internal Revenue Code, but a few common penalties make up 74% of all penalties. The most common penalties are:

Failure to pay penalty – 56% of all penalties, imposed if you don’t pay taxes on time
Failure to file penalty – 14% of all penalties, imposed if you don’t file a return on time
Failure to deposit penalty – 4% of all penalties, imposed if a business doesn’t pay employment taxes on time, or pays them incorrectly

A frequently encountered nuisance penalty is the late-filing penalty for partnerships and S corporations. The estimated tax penalty is another common penalty that taxpayers often dispute by providing an exception when filing the tax return.

Reasons the IRS will remove penalties
You can request penalty abatement for the most common penalties using four reasons:

1. Statutory exception: proving a specific authoritative exclusion to the penalty
Statutory exceptions are uncommon and are easily explained to the IRS, mostly at tax filing. Examples include disaster relief or combat zone relief.

2. IRS error: documenting that the error was the result of reliance on IRS advice
This penalty relief argument is typically unsuccessful and isn’t used much. You must have documented erroneous advice from the IRS that you reasonably relied on, and the IRS doesn’t routinely put tax advice in writing. The Internal Revenue Manual states that the IRS also allows penalty relief based on erroneous oral advice, but in practice, this is rarely seen.

3. Reasonable cause: providing a valid reason that you couldn’t comply based on your facts and circumstances
More commonly, people try to argue that they relied on the erroneous guidance of their tax software or tax professional. This type of argument falls under reasonable cause.

To successfully present a reasonable cause argument for late filing and payment, you must demonstrate that you exercised ordinary business care and prudence but couldn’t comply. You must also demonstrate that your noncompliance was not due to willful neglect.

Most people haven’t traditionally been successful with reasonable cause arguments before the IRS, especially in court. In reality, most penalty abatement determinations never get to court. Most are administrative determinations made by the IRS.

To be successful in reasonable cause determinations, you’ll need to make sure that the IRS considers all your facts and circumstances. If you get a penalty abatement denial letter that doesn’t seem to address all the facts and arguments presented in your penalty abatement request, should request an appeal of the determination.

4. Administrative waiver: taking advantage of a provision that facilitates effective tax administration

The IRS can provide administrative relief from a penalty under certain conditions. The most widely available administrative waiver is first-time penalty abatement (FTA).

FTA can be used to abate the failure to file, failure to pay, and failure to deposit penalties for one tax period when you have a clean compliance history for the past three years. You can use FTA for penalties on Form 1040, Form 1120, and payroll and pass-through entities.

FTA is the easiest of all penalty relief options. You can request it by calling the toll-free number on your IRS notice, or your tax professional can call the dedicated tax pro hotline or compliance unit (if applicable) to request FTA for any penalty amount.


GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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TYPES OF IRS BACK TAX PENALTY RELIEF - AND HOW TO KNOW WHICH ONE IS GOOD FOR YOUR BACK TAXES.

Penalty Abatement, Small Business Back Tax Help, Tax Penalty Relief

The IRS charges (or, assesses) millions of penalties every year. What many taxpayers don’t always know is that the IRS also provides four broad categories of penalty relief for people who qualify and request relief.

Here’s more about each category of IRS penalty relief and how to get started finding out what may be best for your situation.

1. Administrative waivers provide relief under specific conditions.
When the IRS grants an administrative waiver, the IRS provides relief from a penalty it would otherwise assess – if your circumstances fit.

For example, in 2012, when many taxpayers were experiencing economic hardship, the IRS provided relief for the failure to pay penalty for taxpayers who qualified.

The most widely available administrative waiver is often overlooked and misunderstood: first-time penalty abatement (FTA). The IRS grants FTA for people (and, in some cases, businesses) with a clean compliance history.

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2. Reasonable cause relief is usually for situations outside of your control.
The IRS grants reasonable cause penalty relief when your facts and circumstances demonstrate that you exercised “ordinary business care and prudence” in determining your tax obligation, but nevertheless failed to comply.

Depending on the penalty, you might also have to prove that you acted in good faith or that your failure to comply with the law was not due to willful neglect.

The IRS determines reasonable cause abatement on a case-by-case basis, treating each tax form and year separately. The IRS often abates penalties based on reasonable cause because of circumstances beyond your control, such as illness, natural disasters, or destruction of your tax records (as long as you didn’t destroy them intentionally!).

3. Statutory exceptions are for specific circumstances.
The IRS waives or abates penalties because of specific exceptions. For example, the IRS won’t assess penalties for people in combat zones. In another example, the IRS will grant exceptions to the estimated tax penalty when:

The tax is less than $1,000.
There’s no tax liability in the preceding year.
You’re newly retired or disabled.

4. If there’s a documented IRS error, the IRS will abate penalties.
The IRS waives penalties when the IRS makes an error. For example, if the IRS incorrectly posted a filing extension, resulting in a failure to file penalty, the IRS would waive the penalty.

This category can also include erroneous written or oral advice from the IRS that you relied on using ordinary business care and prudence.

So, how do you know which one is best?

This is where the expertise of a tax professional comes in. An experienced tax professional can help you understand how your specific facts and circumstances apply to the tax law governing each penalty abatement option.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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CONSEQUENCES OF OWING BACK TAX DEBTS

Let’s face it. When you owe the IRS and can’t pay, it’s tempting to ignore the issue. Usually, this boils down to fear of the unknown.

If you contact the IRS, will it get you in even more trouble?

The reality is, you should only be afraid if you ignore the issue. If you ignore the tax bill you owe, the IRS can eventually force you to pay using several tools – like federal tax liens, levies, and wage garnishments. And that’s on top of penalties and interest that will pile up.

The good news: The IRS offers options when you can’t pay the taxes you owe – from simple extensions of time to monthly payment plans – and even programs for people in financial hardship situations.

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But if you’re still weighing whether to get in touch with the IRS – here are the Top 10 consequences of ignoring your tax bill.

1. You’ll get IRS notices.

The IRS has to notify you of your tax bill and send certain notices before doing anything else, like collecting your balance with enforcement tools. In and of themselves, IRS letters and notices are a minor nuisance – but if you ignore them, they’ll lead to more significant actions.

2. The IRS will put you in automated collection.

The IRS Automated Collection System (ACS) is your likely next stop if you ignore the notice. ACS is the primary IRS function that collects back taxes. ACS can issue liens and levy bank accounts and wages. The notices you receive from ACS will start to explain more serious consequences if you don’t comply by the deadline.

3. The IRS can take your refund.

If you owe taxes to the IRS and end up with a tax refund due to you in a later year, the IRS will keep the refund. That’s true regardless of whether you’re in an agreement to pay. The good news is that your refund will reduce the tax bill you owe, also reducing your interest.

4. Interest will build up on your balance.

On top of your tax bill, the IRS is going to charge you interest. As the balance grows, so does the interest. The current rate is 5% annually.


5. The IRS will charge you penalties.

On top of interest, the IRS charges a failure to pay penalty on your unpaid tax balance (0.5% per month). But that penalty rate doubles to 1% per month if the IRS has sent you many notices to collect and you haven’t made arrangements to pay. There is a little good news, though. Once you set up a payment agreement with the IRS, the penalty rate drops to 0.25% per month.

6. The IRS could publicly file a federal tax lien.

If you owe taxes to the IRS and got a notice about the balance due, but you didn’t pay, the IRS can file a Notice of Federal Tax Lien. A federal tax lien alerts creditors about your tax debt, which basically protects the IRS’ interest in your assets, if you try to sell property or borrow against it.

Because federal tax liens are public information, many people don’t want the negative impact to their reputations. Also, a lien will negatively impact your access to credit.

Note: Declaring bankruptcy won’t get rid of your tax debt and associated liens.

Practically speaking, even though the IRS has the right to file a Notice of Federal Tax Lien on a smaller balance, the IRS normally won’t file one if you owe less than $10,000. And the IRS usually won’t file a lien if you enter into certain payment agreements.

7. The IRS can seize your money and assets.

You might have heard that the IRS can “seize your assets.” Essentially, that’s a levy (not to be confused with a lien). However, the IRS usually only seizes money. It’s a huge hassle for the IRS to seize houses, boats, etc., and then sell them. In fact, the IRS only seizes property a few hundred times a year.

The most common levies are:

Wage levies (also called wage garnishment) – The IRS takes some of your wages to pay your tax bill. If you get into a payment agreement with the IRS, the IRS will normally stop the levy.
Accounts receivable levies – The IRS takes the money you’ve earned as a small business or independent contractor. If you get into a payment agreement with the IRS, the IRS will stop the levy (although you might have to jump through some hoops to make sure your clients or customers stop sending money to the IRS).

Bank levies – The IRS takes money from your bank account. Again, if you get into a payment agreement with the IRS, the IRS will typically stop the levy.
For individuals, levies can create a huge hassle and disrupt your ability to pay your bills. For businesses, levies can be devastating. By disrupting cash flow, levies can make it impossible to pay your employees, purchase supplies and inventory, and run your business.

8. A revenue officer might show up.

Revenue officers are IRS employees who collect tax debt, usually when you owe large amounts of back taxes, owe for continuous years, and/or have unfiled back tax returns. You’ll want to comply with all your revenue officer’s requests by the deadline, because they have the authority and the duty to quickly enforce back tax issues by filing liens and issuing levies.

9. You may not be able to travel abroad.

Recently, the IRS added a new tax-collection tool to its list. If you owe more than $51,000 and the IRS has tried to collect from you before, but you’re not in a payment agreement or other arrangement with the IRS, the IRS can label you a “seriously delinquent” taxpayer. When that happens, the State Department can restrict your passport.
If you don’t have a passport, this restriction will prevent you from getting one. If you already have a passport, you won’t be able to renew it until you are removed from the “seriously delinquent” list.

10. The IRS could give your case to a debt-collection agency.

If after a few years the IRS has failed to collect your tax balance, the IRS can turn your account over to a private debt collector. Like you’d experience with most debt-collection agencies, if your case goes here, you’ll receive calls and inquiries from strangers. In short, not paying can lead to years of hassle.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return and past due tax returns, you may want to partner with a reputable tax relief company who can help you get the max refund and reduce your chances for an IRS AUDIT.

Advance Tax Relief is headquartered in Houston, TX with a branch office in Los Angeles, CA. We help many individuals just like you solve a wide variety of IRS and State tax issues, including penalty waivers, wage garnishments, bank levy, tax audit representation, back tax return preparation, small business form 941 tax issues, the IRS Fresh Start Initiative, Offer In Compromise and much more. Our Top Tax Attorneys, Accountants and Tax Experts are standing by ready to help you resolve or settle your IRS back tax problems.

Advance Tax Relief is rated one of the best tax relief companies nationwide.

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