WHAT TO EXPECT FROM THE IRS IN 2020 - BACK TAX AUDIT HELP

Audit Letters, Back Taxes, Small Business, Tax Attorney, Tax Relief

Every so often, the IRS itself is audited to make sure it’s following all the rules, regulations, and laws effectively and efficiently. Most businesses should do something similar to make sure nothing falls through the cracks. But when it’s the IRS, the results of resolving an audit issue can have ripple effects.

The Office of the Treasury General for Tax Administration is responsible for auditing the IRS and recently released its 2020 Annual Audit Plan, enumerating all the audit items that need investigation and correction. As the agency works its way through the plan, expect changes to the way your taxes are handled.

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Here are a few audit findings that may cause you more work in future tax seasons. It’s safe to say that the audit issues of most interest are those that increase the amount of taxes you pay.

DID YOU RECEIVE AN IRS AUDIT NOTICE?

Early Distributions from IRAs
Audit number 201810029: Relief from penalties for early distributions from individual retirement plans.

It sounds like the IRS is supposed to make it easier to provide relief, but this audit item actually means the opposite. The IRS already has a process in place for relieving certain taxpayers from penalties for taking early distributions from their IRAs. The audit item says the agency needs to take a closer look at its Automated Underreporter Program.

The concern is that the program is not identifying and working the most productive (for the federal government) cases where taxpayers may owe an additional 10% tax on those early withdrawals. It seems the IRS might be missing out on some taxes because of an inefficient process.

If you took early distributions from your IRA, you and your tax professional might want to revisit the categories of those who receive relief, just to make sure there is an ironclad fit. Otherwise, you may owe more to Uncle Sam.

Virtual Currency Exchange Audits
Virtual currency, such as Bitcoin and other digital money, is going under the microscope. Audit number 201830034: virtual currency exchange audits requires evaluation of the IRS efforts to ensure accurate reporting of virtual currency transactions as required by the US Tax Code (specifically, Titles 26 and 31).

A key issue with virtual currency and taxes is the lack of understanding of how the federal government defines a virtual currency. Just so you know, it isn’t seen as identical to cash. Instead, it is treated more like stocks. Whenever you spend or exchange virtual currency, you must keep a record of any profit or loss created during each transaction.

The IRS is sending what are termed “educational letters” to taxpayers that it determines may not have reported their transactions or else misreported them. Soon, the agency will step-up its enforcement efforts in this space, which may include criminal prosecutions.

Tracking profit and loss becomes difficult if you do not have the appropriate record of the purchase price for your virtual currency and a well-defined valuation of each item purchased with the virtual currency.

If you have any doubts, go back and check your files now. If the current IRS process is found deficient, a new process could capture data that shows virtual currency users owe the feds more than expected. Check the IRS Notice 2014-21, which explains that virtual currency is property, not currency in the eyes of the US government.

Accuracy of Taxpayer Entries on Tax Return Lines Labeled as “Other”
It seems that the Deputy Inspector General thinks the category labeled “other” on various tax forms is ripe for misuse. Audit number 202040002 focuses on determining whether letting taxpayers (or their tax professionals) enter deductions or tax credits without defining them may result in erroneous or fraudulent refunds.

As Peter Reilly said in his Forbes article, you may want to stick with the categories they give you.  Just leave the “other” category alone. Look here for individual credits and deductions, and here for business credits and deductions.

Effectiveness of the Earned Income Tax Credit Examination Strategy
Apparently, the Office of the Treasury General thinks we may be swimming in earned income tax credit fraud. Audit number 201930012 is to determine the effectiveness of the IRS's Earned Income Tax Credit Examination Strategy.

Earned Income Tax Credit is a program for low to moderate-income workers. Kudos go to the IRS for supplying tools and guidance to make it easy to determine who is eligible for the tax credit. Still, there may be those who claimed it that shouldn’t have. Be sure you aren’t one of them.

High-Income/High-Wealth Nonfiler Strategy

After picking on the little people, the audit plan turns its attention to the Big Fish of tax avoidance. Audit numbers 201830036 and 201830037 both task the IRS to prove that they are effectively addressing high-income/high-wealth nonfilers and that the new nonfiler strategy and other processes include these individuals or entities.

Those who earn a lot of money yet do not file taxes, or if they do file but don’t pay, are a definite concern of the IRS. The Treasury General wants to know whether the agency is doing enough and doing it effectively. Who knows how much Uncle Sam is losing out to these rich people?

Of course, rich is a relative term. The top tax rate of 37% is applied to individuals with incomes of a little over a half-million or couples with a bit over $600,000. The 32% rate (third from the top) applies to individuals earning $160,725 to $204,199 and couples earning $321,450 to $408,199.

Treatment of Large Refunds under IRC Section 6405 Threshold

If you are a follower of the Peter Hendrickson school of tax non-compliance, this item (audit number 202030002), you may come under increased IRS scrutiny. The US Government isn’t taking the Cracking the Code author’s aspirations lying down.

Data that shows assessments could be made more effective means more fraudulent refunds could be uncovered. If you have been a compliant taxpayer, no harm, no foul. If you have been trying to find ways to get a bigger refund and colored outside the lines, you may be in trouble.

The fiscal year 2020 list of planned audits is lengthy. Some of it addresses crucial elements of taxpayer privacy and security, a number-one concern of the IRS. However, much of it has to do with finding ways to tighten up enforcement of tax law. You can almost feel sorry for the federal taxing agency. It's had its budget cut like everything else. Yet, the employees are expected to administer and enforce the changes in tax law efficiently.

Still, for 2020, make sure you and your tax professional keep an eye on the outcome of these audits

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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WHAT YOU NEED TO KNOW ABOUT SETTLING YOUR BACK TAXES AND PAYMENT PLANS FOR BACK TAXES

Payment plans, Tax Preparation, Back Tax Settlements

If you owe the IRS back taxes, consider signing up with a payment plan. Yes, the IRS actually has payment plans for people with low income,  not enough time, or maybe just some plain bad luck.

Owing the IRS anything can make your stomach churn, but the agency isn’t completely heartless, regardless of popular opinion. Uncle Sam would rather get something than spend money chasing after nothing, so they have a variety of ways you can pay what you owe with as little trouble as possible.

There is one caveat: you will pay more with a payment plan than you would have if you had paid your taxes on time.  There is the added pain, but it’s less painful than many of the alternatives.

Here is everything you need to know about settling your back taxes with an IRS payment plan.

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Does Your Tax Debt Qualify for a Payment Plan?

That’s the first question you need to answer. Not all back taxes are eligible for an IRS payment plan. While not heartless, the agency can be fickle. It reserves the right to refuse to accept an installment plan at any time for any reason.

Why would Uncle Sam do that?

Your tax forms are incomplete.
Your tax forms are improperly prepared.
Your tax filings from previous years are not up to date.
The IRS thinks you can't pay your tax debt on time.
You are in bankruptcy.
There is an appeal process if your request for a payment plan is rejected, so you still have a chance at qualifying for a payment plan. All that said, 97% of people who owe back taxes qualify for a payment plan.

Setting Up a Payment Plan Doesn’t Stop the Interest and Penalty Accrual
Sorry, but even if you get a payment plan approved, interest and penalties will accrue to the remainder of the balance after every payment. That’s what we meant by our caveat earlier. Also, there may be a fee involved in setting up your plan.

If you owe less than $100,000 in combined taxes, penalties, and interest and apply for a short-term payment plan of 120 days or fewer:

Fees are waived if you apply online, by phone, postal mail, or in person.
Fees are also waived if you pay by automatic checking account withdrawals, or pay by check, money order, or debit/credit card.
If you owe less than $50,000 in combined taxes, penalties, and interest and apply for a long-term payment plan (more than 120 days):

If you choose to pay by automatic withdrawal, the fee is $31 to apply online, $107 to apply by phone, postal mail, or in person.*
If you choose to pay with another method, the fee is $149 to apply online, $225 to apply by phone, postal mail, or in person.**
*Fees waived for low-income applicants.

**Fees reduced to $43 for low-income applicants and may be reimbursed under some circumstances.

A low-income applicant has an adjusted gross income at or below 250% of the federal poverty level. The federal poverty level for 2019 starts at $12,490 for one person to $43,430 for a household of eight. The level is slightly higher for those living in Alaska and Hawaii.

You Need to Pay On Time to Avoid Default
Since the IRS is allowing you this opportunity to pay in installments, don’t spill their milk of human kindness by skipping a payment or paying late all the time. If you don’t pay on time, they can rescind the payment plan, levy a fine, or place a lien on your property.

If you go into default by skipping more than one payment within a year, a reinstatement fee may be charged for starting your plan back up. As always, interest and penalties continue to pile up until the entire balance is paid off.

If you receive a notice from the IRS stating they intend to terminate your installment agreement, call the agency immediately to reduce the chances of enforced collection action. The IRS will hold off on enforced collections under certain circumstances.

When you are considering a payment plan.
While a plan is still in effect.
For 30 days after a request is rejected or terminated.
During the period the IRS evaluates an appeal of a rejected or terminated agreement.
To avoid problems, pay at least the minimum monthly payment when it is due, file all returns on time, and pay all taxes in full and on time. In the future, if you are due a refund, it will be put toward your back tax balance until it’s paid off. Make any scheduled payments anyway.

Obviously, if you move, let the IRS know.

Types of Payment Plans

Again, the IRS shows they aren’t all bad. There are five IRS Tax Installment Agreements you can choose from , depending on how much you owe, how long it will take you to pay, and other considerations.

Guaranteed Installment Agreement

If you owe $10,000 or less, you may be eligible for this plan.

Fill all past returns.
You may not have filed or paid late on the previous five years’ worth of returns.
You may not have used an installment agreement plan within the previous five years.
You must be able to pay the entire balance within 36 months (3 years) or less.
The GIA is simple to apply for online yourself, and you are likely to qualify easily if you meet the criteria above. Another bonus - you don’t need to provide a full financial statement to the IRS to get into this plan.

Streamlined Installment Agreement

If you owe up to $50,000 in back taxes, you may qualify for this plan. It’s easy to qualify and is similar to the guaranteed installment agreement, for now. (It could change.) You can make payments for up to 72 months (6 Years), and you don’t need a financial statement.

Of course, if you pay off early, you can save yourself some money in interest and penalties.

Installment Agreement for Tax Debt over $50,000

Things get a little stickier at this level. When you owe this much money to Uncle Sam, you may have difficulty qualifying for a payment program. This time, the IRS is very thorough in its assessment of your financial situation.

This time you will need a financial statement, and it would be a good idea to have a tax professional help you. (We’re available!)

Partial Payment Installment Agreement

Maybe, just maybe, you can qualify for a partial payment plan if you just can’t come up with the cash to pay off your taxes in one go. It is difficult to qualify for this plan, is all we’re saying. In exchange for allowing you to take longer to pay your taxes, the IRS files a federal tax lien for debt collection guarantee.

Again, talk to a tax professional if you are in this position.

Offer in Compromise

You throw yourself on the mercy of the IRS to see if you can settle your debt for less than you owe. It’s really, really hard to get one of these. You just about have to be destitute. In this case, you definitely need to call us or contact an experienced tax professional.

That’s everything you need to know about settling your back taxes with an IRS payment plan. At least, everything that would fit into a single post.

If you owe back taxes and need help setting up a payment plan, give us a call. Also, subscribe to our blog for more tidbits about 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.

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THE RISKS OF MISSING THE OCTOBER 15 (FILING PAST DUE TAX RETURNS)

tax extension deadline, back tax debt help, tax relief attorneys

The IRS gives taxpayers until April 15 to file and pay their federal income taxes. People who cannot make this deadline to file can request an extension until October 15 by filling out and submitting IRS Form 4868. This extension will grant taxpayers extra time to file their returns. They must pay their estimated amount of taxes by the April 15 deadline, however.

When the October deadline comes and goes, you might wonder what will happen to you for not filing your taxes on time. You may resolve to file your taxes by the original or extended deadline by learning what could occur if you fail to submit your return by October 15.

IF YOU ARE OWED A REFUND

If you miss both the April 15 and October 15 tax filing deadlines and are owed a refund, chances are that nothing will happen to you. In fact, the IRS will more than likely deduct any interest and penalties you owe from that refund. It is up to you then to file and claim that refund if you want it.

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That is not to say you should purposely neglect filing your taxes, however. It is true that the IRS will not go out of its way to remind you to file if it owes you a refund. It does not mind at all that you are lending it more money than you legally are required.

Still, you only have three years to file your return if you want to collect on a refund owed to you. You also should file your next year’s return on time if you do not want the IRS to hold that tax refund as well. It relies on you to file the necessary return if you want to get the refund back to which you are entitled.

IF YOU OWE MONEY

If you miss the October 15 extended deadline and owe the IRS money, you risk getting yourself into a graver situation. You are encouraged to keep in mind that the IRS receives the same income statements as you do. It has access to statements like:

W-2s
1099s
1098s

that verify how much income you have earned during the year. The IRS also knows if you fail to file by the April 15 or October 15 deadline if you have been granted an extension.

Further, the IRS will compile a substitute return for you and then notify you about how much taxes you owe to the federal government. This substitute return will not take into consideration any exemptions or deductions to which you are entitled. It is up to you to include that information on your return when you file.

Once the IRS compiles and notifies you about the substitute return, it will begin collection activity against you. These activities can include levying and seizing your assets including your:

Bank account
Retirement savings
Real estate
Secondary car or home
Life insurance policies

You will be notified in writing about the IRS’ intent to seize or levy your assets. You have up to 30 days to dispute the intention or resolve your debt in order to avoid it. It is critical that you do not ignore written notices from the IRS if you want to protect the assets that you own.

Ideally, you should file and pay your taxes as soon as possible after missing the October 15 deadline. If you avoid filing because you realize you cannot pay what you owe, you may want to consider the options available to you for resolving your IRS tax debt.

IRS collections can be extremely stressful.

IF YOU CANNOT PAY YOUR BACK TAXES

When you cannot pay what you owe to the IRS in one lump sum, you could take advantage of one of the payment options available to you. For example, if you owe less than $25,000 in taxes and are current on filing your tax returns, you could be eligible for the IRS Fresh Start Program.

This program allows you to be set up on an installment agreement during which you will pay on what you owe over the course of several years. Your monthly payments will be based on how much you earn as well as how much you owe.

The payments will be set up to be affordable so you can make them on time each month. You also will be required to have the payments automatically withdrawn from your checking or savings account each month.

If an installment agreement is not within your budget right now, you could make a case for financial hardship. You could present evidence to the IRS that paying your tax debt even in monthly increments would create extreme financial hardships for you and your household. If you meet the criteria for financial hardship, the IRS will hold off on collecting what you owe right now.

You also could make an Offer in Compromise. This option lets you make a realistic offer to settle your tax debt for a lower amount. It must be based on your current income and the value of the equity in your liquid assets. If your OIC is accepted, you can pay off what you owe for less than the actual amount.

Finally, you could apply for a penalty abatement. An abatement allows you to have the penalties and interest taken off your IRS tax debt. It makes it easier for you to pay off what you owe.

MORE TIME TO FILE

In rare instances, the IRS may allow you extra time to file and pay. This rare extension past the October 15 deadline is reserved primarily for people in the military and taxpayers who live overseas.

These individuals could have until December to file their tax returns. The extension is also reserved for military members who are serving in conflict zones.

The IRS gives taxpayers who apply and are approved for an extension until October 15 to file their returns. Taxpayers must pay their estimated taxes by April 15 each year. You can avoid the risk of penalties, interest, levies, and asset seizures by realizing the detriments of missing the October 15 extended filing date.


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

IRS EMPLOYEE CHARGED WITH ACCESSING TAXPAYER FILES

Criminal investigation, Back Taxes Relief Houston

The U.S. Attorney’s Office in the Eastern District of Kentucky has issued a release detailing that an IRS employee at the Covington, Kentucky, IRS Service Center has been charged and arrested with improperly accessing the accounts of taxpayers.

It is alleged that the employee, John Snyder of Cincinnati, who worked in a business return function, accessed the account information of Cincinnati Reds players, Cincinnati Bengals head coach Marvin Lewis, and actors including Kevin Bacon, Alec Baldwin, Sally Field and Chevy Chase.

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The charges are important to maintaining the integrity of the tax system, and are highlighted by the celebrity news aspect of the charges. The maximum sentence Mr. Snyder currently faces is up to one year in imprisonment, not more than a $250,000.00 fine, or both, and up to 1 year of supervised release.

The activities were uncovered from an investigation by the Treasury Inspector General for Tax Administration (TIGTA), which routinely looks for suspicious accesses from employees.

As reported by Federal News Radio from an interview with IRS Spokesman Chris Kerns, over the past 10 years TIGTA special agents have investigated 4,704 cases of potential access violations. Among the “adverse personnel actions” taken in those cases, there were:

444 removals
407 suspensions
215 admonishments
139 other disciplinary actions
176 criminal prosecutions for unauthorized access violations
Federal News Radio reported that another 883 employees resigned from the IRS during investigations or before personnel actions could be taken.

TIGTA was established by the IRS Restructuring and Reform Act of 1998.  Its purpose is to provide independent oversight of IRS activities.

TIGTA investigations include unauthorized access by IRS employees, attempts to bribe IRS employees, assault against IRS employees, fraud committed by IRS employees, impersonating IRS employees and improper use of IRS emblems.

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.

#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief
 #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes #OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

WHAT IF YOU OWE BACK TAXES AND CAN’T PAY?

Back Tax Returns, Tax Debt Relief, Tax Settlements, Tax Relief Attorneys, Tax Help 

Are you asking yourself “what if I owe taxes and can’t pay?” You’re not alone. Each year, about one out of six people owe taxes when they file their tax return – and many of them can’t pay right away.

Many people ask themselves why they would file if I owe the IRS and can’t pay. After all, why create a tax bill? Because not filing only makes matters worse. Here’s why.

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REASONS YOU SHOULD FILE EVEN IF YOU CAN’T PAY

You’ll owe more in the end, with penalties and interest.
If you don’t file your return on time and pay the tax you owe, the IRS will charge you (or, “assess”) a failure to file penalty that can add up to 25% more to your tax bill. On top of that, the IRS charges interest on the taxes and the penalties you owe.

Eventually, the IRS can collect what you owe – taxes, penalties, and interest – with tools like federal tax liens, levies, and wage garnishments.

THE IRS CAN FILE A RETURN FOR YOU

The IRS can prepare a return for you, called a substitute for return. But this return won’t be good for you. The IRS will prepare it with income information from your bank, employers, and other payers – and you won’t get any credits or deductions you’re entitled to. So it’s usually best to file your own return.

THE IRS CAN HOLD FUTURE REFUNDS

You may be due refunds in future years. But not filing now can affect you for years to come. If you don’t file a return now, the IRS can hold your refund in the future, meaning your money will just be sitting with the IRS. If you want to start receiving refunds again (or use your refund to pay off the taxes you owe), you’ll need to file the back tax returns.

WILLFULL NON FILING CAN BE A CRIMINAL OFFENSE

The IRS doesn’t prosecute many people each year for tax crimes. But there can be stiff penalties – including a 75% penalty for willingly and knowingly not filing a tax return. It’s called the fraudulent failure to file penalty. Remember: Notorious mobster, Al Capone wasn’t prosecuted for any of his violent crimes or even for filing an incorrect return; he was prosecuted for not filing a return at all.

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.

#TaxDebtHelp #FilingBackTaxesHelp #TaxReliefHouston #BackTaxRelief
 #TaxAttorneysNearMe #IRSLawyer #TaxReliefFirms #OfferInCompromise #TaxResolution #LocalTaxAttorney #HelpFilingBackTaxes #TaxDebtSettlement #TaxReliefAttorneys #IRSHelp #TaxRELIEF #TaxAttorneys #AuditHelp #BackTaxes #OfferInCompromise #WageGarnishmentHelp #AuditReliefHelp #SmallBusinessTAXES

WHAT COULD HAPPEN IF HAVE NOT FILED TAX RETURNS IN 5 - 10 YEARS

Tax Evasion, Back Taxes, Tax Relief, Tax Preparation

Not filing taxes for several years could have serious repercussions. Not only can the IRS stop you from applying for a passport or a mortgage, but they can also create a Substitute for Return against you, charge you for failure to pay, or charge you for failure to file.

Before you panic, let’s take a look at what could actually happen and how you can mitigate the chances of the worst of the punishment.

If you’re wondering how the IRS knows how much you owe since you haven’t filed, it’s because the IRS will file a Substitute for Return (SFR) on your behalf. However, it will be filed as single or married filing separately. You will not receive any exemptions or deductions that are rightfully yours.

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Once the SFR is filed, you are sent a notice to accept the tax debt as filed in this form. With no response, the IRS issues a notice of deficiency. After that, you owe tax, and the agency starts the collection process. They could place a levy on your wages or bank account. The IRS also has the option of placing a federal lien against your property.

IRS collections can be extremely stressful.

Short and Long Term Consequences of Not Filing for Ten Years

There are several things you may need over the course of your life that require you to show tax returns:

Application for a mortgage.
Application for a passport.
Application for student financial aid.
Application for healthcare insurance.
Credits toward Social Security retirement or disability benefits.
There are more, but you get the idea. Your tax returns are part of the documentation required for a variety of financial dealings. You don’t have them, you don’t get the loan, passport, or whatever else you need.

Other things that could, and probably will happen include the IRS charging you with failure to file and failure to pay. Each of these charges contains its own penalty, although failure to pay carries a heavier burden.

The worst that could happen is that you could go to prison for tax evasion, which can be as much as five years and $250,000 in fines.

Get Your Act Together

What you need to do is fix the situation as soon as possible. Prepare to file all your returns and face the music.

Locate and gather the financial records required for each return. That means W-2’s, 1099’s, and anything else you need to fill out your forms. If you can’t find something, ask the IRS for a copy.
Either prepare your returns yourself or seek assistance from a tax professional. It may sound self-serving for us to say it, but a tax professional is probably the better idea.
Remain seated while learning how much you owe the federal government.

All those SFRs the IRS filed for you? Refiling your taxes will supersede those, so at least you can get your exemptions and deductions back. There is no time limit for submitting unfiled returns. There is also no limit to how long the IRS has to collect.

We won't soft-peddle it. Between the fees, penalties, interest, and back taxes, you may be looking at quite a bit of money to pay.

Fees, Penalties, Interest, and Back Taxes

Yep. You will owe more than the taxes you didn’t pay on time. You will also be required to pay penalties for non-compliance…  there’s that failure to file and failure to pay penalty. You owe fees on the unpaid portion of your tax bill. Also, the IRS charges 3% interest on the amount you owe for every year you don’t pay.

Finally, there is the tax you owe for each year. It can all add up to a pile of money. However, there is a way to get some relief.

Negotiating Payment

For the IRS, the bottom line is the bottom line. The agency would prefer you to cooperate, negotiate, and pay as much as you can, in preference to sending you to jail. Of course, even after you pay the money, the IRS still has three years to charge you with a criminal offense. Still, it's unlikely they would do so if you go along with everything and continue to toe the line.

The first thing to do is to admit you made a mistake and you are prepared to pay your dues, as it were. Then keep in touch with the IRS to show you really mean to go straight and get things squared away.

You have several options for paying your tax bill and attendant penalties, fees, and interest:

Take the funds from savings, but not your retirement accounts.
Make a partial payment to cut down the size of the bill and the amount of interest accruing.
Ask for a payment extension or an installment plan. Payment extensions allow you an additional 120 days to pay. Installment plans are requested through IRS Form 9465, Installment Agreement Request. Payment plans for up to six years are available. Keep in mind interest continues to accrue on the unpaid amount.

There may also be a set-up fee.

Ask for leniency due to hardship or request a reduction in your tax bill using an Offer in Compromise. You must prove the tax bill will cause you a tremendous burden, like having to sell your home, for the hardship case. For Offers in Compromise, you need to file all your tax returns. You will have to finish filing your ten years’ worth of taxes to use this remedy to settle your tax debt for less than you owe. Understand that an Offer in Compromise is a long shot; very few are granted.

Stay Current and Plan for the Future

Once you have all of your taxes filed, all eleven years (don't forget this year’s taxes), plan ahead to avoid this issue in the future. Talk to a tax expert about your withholdings and whether making quarterly payments would make sense for you.

Learn from your decade-long mistake. Keep up with your federal and state taxes. Wishing you didn’t have to pay them doesn’t make them go away. So stay off the agency’s radar and pay your taxes every year, on time, and in full.


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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THE DIFFERENCE BETWEEN IRS TAX LIENS AND WAGE GARNISHMENTS/TAX LEVY

IRS levies and property seizures, IRS Seizures, Tax liens, Wage Garnishments, Tax Relief Houston

The IRS has two ways to collect back taxes:  a Federal tax lien and tax levy. A tax lien is different from an IRS levy – the lien does not result in the IRS taking your property from you.  That is done by levy.

You have rights to defend the filing of a lien, and prevent the issuance of a levy.  To be able to assert your rights and protect your property, it is important to understand and recognize the tools the IRS uses.

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

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

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CALL (713)300-3965

Here is what you need to know about the IRS tax lien and IRS tax levy:

IRS TAX LIEN

An IRS tax lien protects and secures the IRS’s rights to your property.  The lien attaches to property you own when it is filed, and property you purchase later.  A Federal tax lien most commonly impacts real estate.

If you own a house, and the IRS files a tax lien against you, the lien would give the IRS an interest your home similar to that of your mortgage company.

Example:  Your house is worth $90,000, and you have a mortgage of $65,000 on it.   There is $25,000 of equity in your house. Before the IRS filed its tax lien, that equity would be yours.  Now that the lien has been filed, the equity belongs to the IRS. If you want to sell your house, the IRS gets your equity at closing, not you.

The IRS usually files its Federal tax lien with county recorder or clerk of courts in the county where you reside the property is located.   For the tax lien to affect real estate, it must be filed in the county where the property is located. It would then encumber all of your real estate in that county.  A federal tax lien does not name the property it attaches to – it automatically encumbers all your real estate in the county it is filed and all of your other personal property.

If the IRS files a lien against you, you have a 30 day window to file an administrative appeal to request reconsideration of the filing.  This is called a collection due process appeal.

The lien expires when the IRS statute of limitations on collection expires – in most cases, 10 years.

IRS TAX LEVY / WAGE GARNISHMENT 

The purpose of an IRS levy is to take your property.  An IRS levy is the same as a seizure, or garnishment. The IRS can levy on your wages, bank accounts, subcontractor pay, accounts receivable, even retirement accounts.  The IRS can seize your house, car or your business equipment (although those are rare). For most people, it is the levy, not the lien, that hurts.

There are only a few things the IRS cannot levy  – these “exemptions” are listed in Internal Revenue Code 6334.   The exemptions you can claim include the right to keep unemployment benefits, workers compensation, most household goods and some tools of your trade from the IRS.

Before the IRS can levy on your property, they must first send you a Final Notice of Intent to Levy.  This is your notice that the IRS intends to start enforcement against you. After you receive the Final Notice of Intent to Levy, you have 30 days to file an appeal of the proposed IRS collection action. If you file the appeal, the IRS is prevented from taking action until your hearing is completed.  The purpose of the hearing is to reach a resolution to levy action before it occurs – offer in compromise, installment agreement, uncollectible, for example.

The IRS does not need to file a Federal tax lien as a prerequisite to levying your wages, bank accounts, etc. – just the Final Notice of Intent to Levy.

In the rare cases of seizure of a house, the IRS must get court approval first.  To do this, the Department of Justice will usually file a lawsuit against you in Federal District Court seeking approval to foreclose and take your house.  Again, this is not a preference of the government.

The Federal tax lien and tax levy gives the IRS different rights against you – the lien as to security in your property, the levy to take it.  Together or apart, the lien and levy are powerful tools for the IRS.

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 RESPOND TO IRS NOTICES (CP 2000)

CP2000 notices, at a glance:

You get a CP2000 notice when your tax return doesn’t match income information the IRS has about you.

CP2000 notices aren’t audits, but they work the same. It’s important to fully respond by the IRS deadline.

You have the right to contest penalties and appeal a CP2000 determination. But you must ask.
You can get expert help resolving your CP2000 notice.

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

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
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What you need to know about CP2000 notices

When your tax return doesn’t match income information the IRS has (like Forms W-2 and 1099), the IRS sends a notice. It’s usually a CP2000 notice, also called an underreporter inquiry.

This notice basically proposes taxes, and possibly penalties, you might owe for missing income on your return. Sometimes, the IRS can question deductions or credits you took that don’t match information statements filed under your Social Security Number.

But CP2000 notices are computer-generated and may not be right. You might not owe the full amount – or anything at all. In fact, many taxpayers who get a CP2000 notice don’t end up owing anything.

What to do if you get one of these notices? There’s a process. You or your tax pro will need to investigate the issue more and get back to the IRS within a certain amount of time. And, if the IRS says you owe penalties, that’s something you’ll need to take care of, too.

Here’s how it works.

How to respond to a CP2000 notice

1. Evaluate your situation and decide on the right response.
Start by validating that you owe more taxes. To do that, you’ll need to determine whether you correctly reported the income in question on your tax return. Here’s how:

Gather all the information statements under your Social Security Number. These are the forms you get at tax time reporting your income for the year (like W-2s and 1099s). Compare those statements with your tax return to see whether you left any income off your return.

If so, you’ll need to properly calculate any additional tax that you may owe. Keep in mind that you also might have additional deductions that factor into the new tax calculation.
Determine whether you agree, partially agree or disagree with the CP2000 notice.

2. Respond to the IRS.

If you agree with the notice, send the CP2000 response form back to the IRS with payment (if applicable). If you can’t pay the entire amount, you can request an installment agreement with your CP2000 response.

If you partially agree or disagree with the CP2000 notice, you’ll need to compile and mail a response to the IRS with documents proving your position. You can attach a corrected return to help clarify your position, but don’t file an amended return. If the IRS accepts your explanation, the IRS will correct your return.

You can also address any proposed penalties in your response to the underreporter notice.
If the IRS rejects your response, consider appealing the decision.

3. Prevent future underreporting and resulting penalties.

After about eight weeks, call the IRS or analyze your transcripts to confirm that the IRS resolved your issue.
To avoid penalties on more recent returns, analyze your information statements to determine whether you made the same error in other years. If necessary, you can file an amended return on these years to avoid the additional 20% accuracy penalty.

For future returns, gather all your information before filing. You can request your information statements from the IRS (called wage and income transcripts). But beware, wage and income transcripts don’t contain all your Forms W-2 and 1099 until late May.

Make an appointment for a free consultation by calling 800-790-8574.

Gather these six items for your appointment
A copy of your IRS notice
Any responses you’ve already sent to the IRS
A copy of the tax return in question
Copies of your tax returns from the year before and the year after the tax return in question
Additional deductions or expenses related to the underreported item (example: costs of stock for unreported stock transactions on Form 1099-B)
Any underreporter notices you’ve received in the past

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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RECEIVING IRS NOTICES? HOW TO PROTECT YOURSELF

Automated Collection Service, IRS collection notices, Tax Relief Houston, Tax Debt Relief

A common fear is that an IRS agent may show up one day at your door, take your house, your wages, and your property.

But if the IRS wants to get your attention on a tax debt, chances are you can expect to find an aggressive collection letter in your mailbox rather than find them at your front door.

The IRS only has a few local collection agents, with most enforcement staffing located at several call centers, known as the IRS Automated Collection System.

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

ADVANCE TAX RELIEF LLC
www.advancetaxrelief.com
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As the IRS has more computer resources than local agents (known as Revenue Officers), they assign most cases to call centers.  Only files deemed to be of urgency or significance are assigned to local Revenue Officers.

The IRS call centers are not going to place a personal call to you. There is not enough IRS staffing at the call centers to, well, make calls.  Instead, the IRS call centers take calls, and those calls are expected to come from you.

The IRS tries to get you to contact their call centers by sending computer-generated letters to you, ranging from simple billing letters to written threats to take your wages and accounts.  These letters are not generated by human beings, but rather by a computer algorithm which decides and programs for the IRS when the collection letters should be sent.

The computer-generated letters are usually sequenced, first starting “soft” with an initial balance due statement, and then continuing with increasing intensity, leading to a Final Notice of Intent to Levy.

The goal of the letters is for you to pick up the phone and call the IRS Automated Collection System call center.

Should you take the bait and contact the IRS Automated Collection System after receiving a letter from their computer?

Here are the steps to take to protect yourself before picking up the phone and calling the IRS:

1.     Know the limitations on what the Automated Collection System computer cannot do.

For example, an IRS computer cannot take:

Your house.
Your car.
Personal belongings and household goods.
Business tools, supplies, and equipment.
401k retirement accounts.
These seizures tend to be more complicated, and serious, and require the involvement of a local Revenue Officer.  And the IRS computer likely does not know what car you drive, the value of your house, how much you owe on your mortgage, or the details of your business.

If the IRS computer cannot take it, consideration should be given to if it is necessary to call and protect it.

2.     Understand how the IRS computer works, and what it knows about your finances.

The computer gathers data from what is reported to the IRS about you, usually on Form W2 or Form 1099.  The W2 is reported to the IRS at the beginning of every year, telling them where you work and how much you are paid.  If you have a bank account that pays interest, your bank will send the IRS a Form 1099 – now they know where you bank.  And if you work as a subcontractor or receive retirement income, you should receive a 1099 showing the amount you were paid, and the source. The IRS computer receives this, too.

The IRS computer sees that you owe taxes, and has information about where you work, and is programmed to put two and two together to try to contact your employer to take your paycheck.

If you call, be prepared to be immediately questioned by an IRS agent manning the phone lines about your finances, in an effort to supplement the information known by the computer.  They will want to know about all of your bank accounts, retirement accounts, real estate, cars, income, and living expenses.

3.     Learn if the IRS has sent a Final Notice of Intent to Levy.

Without the Final Notice of Intent to Levy letter, the IRS cannot make a computer match to levy your income, bank accounts, or property.  If you are unsure if the IRS has sent the Final Notice of Intent to Levy, the IRS will make account records available that will show if it has been sent.  That way, we know if you are protected, or need to act.

Even if the computer has sent a final notice, tax laws give us the right to stop the levy by filing an appeal.This is known as a collection due process appeal, and can be filed up to one year after the IRS sends the final notice. It typically takes the IRS 4-6 months to process the appeal, and assign the file to a Settlement Officer for a hearing. At the hearing, alternatives to levy can be negotiated, like an installment agreement, or an offer in compromise settlement. During this entire time, no levy should occur, giving you the ability to resolve without facing a loss of property by levy.

4.     Find out how much time is left on the 10 years the IRS has to collect from you.

The collection of tax debts does not go on forever. Under Internal Revenue Code section 6502 gives the IRS 10 years. After the 10 years are over, the IRS is required by law to give you a credit for the unpaid taxes, which results in your account balance being reduced to zero. You would then be done with the IRS.

The IRS makes the collection end dates available, and will provide written records to show the clearing of your taxes after the 10 years.

If you have received an IRS computer-generated collection letter, and there is a short time left on the 10 years, consideration should be given to whether now is the time to pick up the phone and call.

Sometimes, sitting tight and not contacting the IRS can be the best approach under the right circumstances, such as if the IRS does not have computer information about your finances, or if a Final Notice of Intent to Levy has not been sent.

Chances are the collection of your tax debt is between you and a machine. Understanding how the IRS uses a computer to collect taxes, and the limitations on what the computer can do, is essential to protect yourself before picking up the phone.

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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OWE BACK TAXES? IS AN IRS REVENUE OFFICER ABOUT TO CONTACT YOU?

Revenue Officers, Collection Enforcements, Unfiled Back Taxes, Tax Relief Houston

Surprises can be fun – birthdays, anniversaries, maybe even one in a scary movie.

But one surprise that you don’t want is an unannounced visit from an IRS Revenue Officer.

That can make you feel like a scary movie is coming to life.

A Revenue Officer can take your house, levy your wages, clean out your bank account, and even take your business equipment.  If you owe money to the IRS, Revenue Officers have more power than any other IRS employee.

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

An IRS decision to send a Revenue Officer to you is not random, but rather based on careful consideration of your situation.  The more severe the IRS considers your case to be, the greater likelihood of Revenue Officer assignment.

But you do not have to be in the dark as to the whether you are at risk for a visit from a Revenue Officer.  There are clear ways to know if a knock on your door may be coming. You can reduce the chances, and be ready if the IRS comes calling.

Here five factors the IRS uses to determine if a Revenue Officer will be visiting you:

How much do you owe to the IRS?

For the most part, the IRS does not use its big gun, the Revenue Officer, to go after smaller balances.  IRS Revenue Officer resources are limited. The IRS has approximately 14,000,000.00 delinquent collection accounts but only around 3,500 Revenue Officers.  Clearly, all IRS tax debts are not created equal.

That means the IRS is generally not using its top tier agents on balances under $100,000.

In most cases, only if you owe $100,000 or more to the IRS, is it considered serious enough to merit contact from a Revenue Officer.

Do you have unfiled back tax returns?

Maybe you had a tax return that you knew you could not pay, and were paralyzed to file it.  Or maybe you are better at your craft than bookkeeping. Regardless, the IRS wants your tax returns, and it is Revenue Officer’s job to collect them from you.

In most cases, the IRS considers filing the last six years’ returns as sufficient.  Even if you have returns unfiled for 10 or 20 years, Internal Revenue Manual guidelines permit the IRS to accept six, and you are done.

IRS records can be obtained with what they know about your unfiled returns, including who paid you and how much.  This can be used to prepare tax returns to get you back in the system and lower the risk of a surprise visit from a Revenue Officer looking for your filings.

How many years of taxes do you owe the IRS?

The longer your problem has persisted, the more the IRS wants a Revenue Officer to make sure it stops.

We are human, and we make mistakes – one mistake can be owing the IRS year after year, with good intent to one day get ahead.  The IRS calls this “pyramiding.” Every year you stack a new tax liability on top of another.

The more you pyramid your taxes, the greater your risk of contact from a Revenue Officer.  Generally, owing the IRS for three or more years is enough to cause the IRS to take notice.

We want to stop the pyramiding and lower the chances of an IRS Revenue Officer coming around.

What type of taxes do you owe to the IRS?

If you have a business and have not been paying your employee withholding taxes, you have a higher risk of hearing from an IRS Revenue Officer.

The IRS places a high priority on using Revenue Officers to work employment tax cases because the taxes involve other people’s money.  If you have employees, you are required to deduct taxes from their paychecks, and pay that to the IRS. But you may have run into cash flow problems, and you find there is not enough money to pay the IRS and your overhead.

When you choose to pay the overhead and not the employee withholding taxes, the IRS gets aggressive.  Cash flow needs to be addressed to find the room to pay the money to the IRS. If you have not filed your employment tax returns, those need to be immediately prepared and filed.

The sooner we get into compliance with your employee withholding taxes, the less likely it will be for the IRS to come knocking.

Are you paying this year’s taxes?

Simply put, the IRS wants you to get updated with filing and paying.  Now.

If you are self-employed, and have had trouble setting money aside for IRS estimated taxes, a good solution is to open a new bank account.  Every time you get paid from a customer, it is best to take a percent of that check, and put it aside in the estimated tax bank account.

For example, if your most recent tax return shows that your customers paid you $50,000, and you owe $5,000 to the IRS, we know that 10% of every dollar you are paid is for taxes.  Going forward, 10% of every check you receive should go into the estimated tax account to pay your current taxes.

The last thing you want during your day is a surprise visit from an IRS Revenue Officer.  What’s done is done, but that does not mean the future cannot be better, with less tax stress.  The risk of the IRS showing up at your house or place of business can be minimized, and the beast can be tamed.

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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