A GUIDE TO SMALL BUSINESS TAXES

For business owners everywhere, the end of the year means that it is time to get ready to file their businesses’ tax returns. Rather than wait until the last possible minute, you can get ready now for tax filing season with some common sense advance planning. These strategies could help you maximize your deductions, lower your taxable income, and possibly increase the amount of your tax refund. 

CHOOSE AN APPROPRIATE BUSINESS STRUCTURE  

If you have not already, you need to choose the best business structure for your company. Depending on your business, you can choose from one of four structures. These are: 

Sole proprietorship

S or C corporation

Limited liability company or LLC

Partnership

All of these business structures carry different implications for your company’s tax returns. For example, a sole proprietorship is generally reserved for people who are business novices or just learning how to run their own company. 

If you are not sure of what structure to choose for your company, you should consult with a tax professional who can help you identify the best one to use for your business’s tax filing purposes. 

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

OBTAIN AN EIN

Another important tip that you need to take care of as early as possible involves getting an Employee Identification Number or EIN. An EIN takes the place on your tax returns of your Social Security number. 

According to tax experts, it also reduces the likelihood of you becoming a victim of identity theft since your Social Security number will not be used on your business’s tax return. Moreover, an EIN is required for all business structures except for sole proprietorships that have no employees. 

LOOK OVER YOUR BOOKS

One of the costliest and most troublesome mistakes that business owners make is forgetting to keep up their books throughout the year. As the end of the year approaches, you might need to scramble to get your books in order and find receipts to back up any deductions you plan to take on your taxes next year. 

 

You can avoid this dilemma by using a high-quality and reliable bookkeeping program or outsourcing your bookkeeping to an accountant or CPA. You should also periodically review your books so you know how much income you are bringing in, what your expenditures are, and how much you might need to pay when you file your business’s tax returns. 

 

This tip can be especially vital when you consider that the IRS tends to audit small business owners more often than private taxpayers. Failing to keep good records could trigger an IRS investigation of your business. Rather than scramble to find receipts and account for deductions, you can get ready to file your taxes and prepare for a possible audit by reviewing and updating your books now. 

 

MAKE QUARTERLY TAX PAYMENTS 

 The IRS will require you to pay your taxes on a quarterly basis if you structure your business as a sole proprietorship, partnership, or S-corporation and you expect to make more than $1000 in income. If you are not sure of how much you should pay this quarter as the end of the year approaches, you are advised to review your company’s last year’s income, deductions, and tax credits. This information could help you figure out how much you need to pay for your quarterly taxes. 

 

It is important that you pay at least 90 percent of what you owe this quarter if you want to avoid expensive IRS tax penalties. If you are not sure of how much you should pay or you do not know how to figure out your quarterly taxes, you should consult with a tax professional before filing your return. 

PAY YOUR SELF-EMPLOYMENT TAXES

When you own your own company, you do not have the luxury of having an employer withhold your taxes for you. Instead, the IRS expects you to withhold and pay self-employment taxes for Medicare, Social Security, and other federal taxes. 

 

When you file your business’s tax return, you should make sure you include these self-employment taxes before submitting it to the IRS. Failing to pay these taxes could result in you being audited and heavily penalized.

 GET TAX RELIEF HELP TODAY

 

If you think that you may need help filing your 2018/2019 tax return or 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 MUCH TIME DOES THE IRS HAVE TO COME AFTER ME FOR UNFILED BACK TAX RETURNS?

If you do not file a return, the IRS technically has forever to assess taxes as the statute of limitations of assessment (ASED) does not begin to run. But, some good news! The IRS policy is that if you do decide to get up to date and file old returns, you only need to go back and file for the past 6 years. In some circumstances, you may have to go back a little bit further. 

What if you complete my returns and find out I owe money? And what if I can’t afford to pay it?

Even if we find that you owe money, we would still file the return. If you don't have the money to pay, this could be the best time for us to settle your back taxes....not in the future when you have money. The only way to settle a tax debt, is to first have the IRS recognize it with a tax return. 

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

BBB A+ RATED

CALL (713)300-3965

Tax Attorneys near me, Back Tax Debt, Tax Relief help

What if you file my returns and I find out the IRS owes me money?

This is another reason why we want to act quickly. The rules are written totally in the IRS's favor. While the IRS has forever to assess you if you don't file, you only have 3 years from the date the tax return was due, or two years since the date of payment to file a return to claim a refund.

 

The IRS hasn’t contacted me about my unfiled tax returns. Why should I bother?

While having criminal charges filed against you are a (small) possibility, there is a much bigger reason you should file. When you don’t file your taxes, the IRS basically files them on your behalf using things like 1099s, W-2s, and K-1s. This is called a ‘Substitute Filed Return”. More often than not, the SFR shows that you have a much bigger liability than you actually do! We are able to file much more accurate returns for you by factoring in deductions.

 

Also, if they file an SFR and you do not sign it, that means they have forever to file and assess you more.

 

What if I don’t have any records, how can you file my return?

Sometimes people don’t hold on to their records. Sometimes they lose them in a flood or fire. Whatever the case, there is hope. W-2s, 1099s, 1098s, K-1s, etc. are all going to be on your IRS records. We can also get an IRS report on you called a W & I Transcript that can tell us all of your income and withholdings.

 

Next, we use your bank records. We also use an IRS approved tool to get industry averages if you are missing records. It helps us get general guidelines of costs, deductions, etc. It is completely legal and a tool we use in audits when there are missing records. One of the reasons people hire us is because we are able to complete tax returns that others thought too difficult or impossible to complete. 

 

Can you help with unfiled tax returns for my business, too?

Absolutely. We handle both individual and business tax returns. All of our tax prep is done in house, so we can prepare and file your returns, and help you get into a payment plan if you need to.

 

I haven't filed taxes in 10 years. I haven't taxes in 20 years. Have I dug a hole that is too deep to get out of?

 

No. Chances are, your problem is not as bad as you think. We've helped out people just like you get a tax problem behind them.

 

We have a proven track record of success in helping thousands of taxpayers dig out of their tax troubles. With over 30 years of experience, we've developed a process. It works.

 GET TAX RELIEF HELP TODAY

 

If you think that you may need help filing your 2018/2019 tax return or 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 IRS IS INCREASING FOCUS ON TAXPAYERS IN HOUSTON WHO HAVE NOT FILED THEIR TAX RETURNS

Advance Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

It is expected that the IRS will visit more taxpayers who have yet to file their past tax years in an effort to increase tax compliance and enforce the law. The IRS is also looking into tax data, researching new compliance methods, and including increasing in-person visits to taxpayers who are in collections or out of compliance.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

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www.advancetaxrelief.com

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Tax Attorneys near me, Back Tax Debt, Tax Relief help

The IRS’s main goal is to bring delinquent taxpayers into compliance by filing all unfiled past tax years as well as assisting with any pending payment obligations taxpayers may still have with the IRS. The IRS wants to further promote compliance by also using the following systems:

Increase Identification and cases for individuals and business non-filers. The IRS will look into assigning new cases to IRS employees to ensure those assist those who have yet to file their past tax years.

Automated Substitute for Return program (ASFR). Individual taxpayers who have multiple unfiled years as well as a tax liability possibly tied to these years will receive notices alerting them to tax years that need to be filed as well as any potential tax liability they may owe.

Automated 6020(b) process. Promotes employment tax filing by identifying business taxpayers with employment requirements who have yet to have filed for a specific tax period. The IRS will be making greater efforts to ensure that businesses comply with both tax filing and payment requirements.

Delinquent Return Refund Hold Program (DRRH).  A taxpayer’s refund will be held if the IRS finds that the individual has at least one unfiled tax return within the last five years.

Many non-filers are owed tax refunds but are unable to receive them because of past tax years that still need to be filed. The IRS strongly recommends filing any unfiled years to ensure they receive any future tax refunds. 

GET TAX RELIEF HELP TODAY 

If you think that you may need help filing your 2018/2019 tax return or 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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OWNERS OF CHEESECAKE RESTAURANT INDICTED FOR TAX EVASION

According to the indictment, Anthony Lucidonio Sr., and his son, Nicholas Lucidonio, both of New Jersey, owned and operated Tony Luke, a cheesesteak and sandwich restaurant located in South Philadelphia. 

From 2006 through 2016, the Lucidonios allegedly hid from the IRS more than $8 million in receipts by depositing only a portion of Tony Luke’s receipts into business bank accounts and filing with the IRS false business and personal tax returns that substantially understated their income. 

The indictment further alleges that the Lucidonios committed employment tax fraud by paying employees a portion of their wages and salaries “on the books” for some hours they worked, but then paying substantial additional wages for the remaining hours worked “off the books” in cash, without withholding and paying to the IRS the required employment taxes. From 2014 through 2015, they also allegedly filed false quarterly employment tax returns with the IRS substantially understating wages paid and taxes due.

It is also alleged that after a dispute over franchising rights arose between the Lucidonios and another individual in 2015, the Lucidonios, concerned that their tax fraud scheme would be revealed, amended prior year tax returns to increase reported sales, but then falsely offset the increased income by inflating expenses.  

If convicted, the defendants face a maximum sentence of five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge. Defendants also face a period of supervised release, restitution, and monetary penalties.

An indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

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CALL (713)300-3965

Tax Attorneys near me, Back Tax Debt, Tax Relief help

REASONS YOU GOT AN IRS NOTICE INSTEAD OF YOUR TAX RETURN

Every year, millions of Americans ask, “Where’s my refund?”

Many of them find an answer at IRS.gov. But there are millions of others who expect a refund but instead get a notice – usually from the IRS – or a smaller-than-expected refund. 

If this happens to you, here are possible reasons for this often unexpected change:

1. You or your spouse owe federal or state taxes.

This is one of the most common reasons the IRS lowers refunds. When you owe the IRS, the IRS has the right to take your refund to pay back taxes, penalties, and interest you owe. If your spouse owed taxes before you were married, the IRS can take your joint refund to pay for the past taxes.

If you owe the IRS or state, you’ll need to figure out:

How much you owe

Whether the IRS or state is correct about that amount

Whether you can do anything to lower it (or any penalties and interest)

If the IRS took your joint refund to pay for your spouse’s premarital tax debt, consider requesting your portion of the refund. This is called an injured spouse claim.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

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CALL (713)300-3965

2. You or your spouse owe other types of debt.

The IRS is required by law to take your refund or part of your refund to pay for certain other debts, including:

Delinquent child support

Delinquent student loan debt

Back unemployment compensation that shouldn’t have been paid

If you owe a government agency other than the IRS or your state tax authority, you’ll need to work directly with that agency. If you didn’t get a notice explaining where your refund went, call the Bureau of Fiscal Services at (800) 304-3107.

You can also file an injured spouse claim to get your portion of a joint refund when it was taken to pay these other types of debt, if that debt belongs only to your spouse.

3. The IRS thinks you made an error on your return.

The IRS can make certain changes to your return if the IRS thinks there was an error. For example, the IRS could adjust your return if your or your dependent’s name and Social Security Number (SSN) don’t match IRS records.

Or, if your return has an inconsistency, the IRS may change your return and send you a notice. This could be something as simple as the IRS denying a child-related credit when the taxpayer who took it doesn’t have children.

When the IRS thinks you made an error, the IRS will send you a notice. Notices can be confusing, so if you don’t understand exactly why the IRS made a change to your return, call the IRS or look closer at your tax account. You can 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.

4. The IRS is verifying that you qualify for a credit or deduction.

The IRS can hold your refund and send you a notice asking for proof that you qualify for a credit or deduction you claimed on your return. This commonly happens with the Earned Income Credit (EIC), when two people (usually former spouses) both claim the same child as a dependent. Another common example is tax identity theft (see #5).

You should provide the IRS with the information it needs, as soon as possible. Learn more about IRS return problems. Or, you can get in touch with a tax pro for help.

5. You were a victim of tax identity theft.

The IRS may send you a notice to verify that a return filed using your SSN is legitimate.

If the return was yours, respond to the notice so that the IRS will process your return and issue your refund.

If the return wasn’t yours, respond to the IRS by verifying your identity and making sure the IRS processes the return that you filed (not the fraudulent one).

6. The IRS is looking into another one of your returns.

If the IRS has opened a delinquent return investigation or has started auditing a return you already filed, the IRS may freeze your refund until that process is complete.

If you owe taxes because of one of these issues, the IRS will put your refund toward the taxes. If you don’t owe any taxes, the IRS will release your refund after it completes the investigation or audit.

Learn how to handle an IRS audit or back tax returns.

Best course: Respond quickly

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.

Or, get help from a tax pro, who can help you get to the bottom of any missing or reduced refunds, and deal with the IRS for you.

GET TAX RELIEF HELP TODAY

 

 

If you think that you may need help filing your 2018/2019 tax return or 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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FORM 2848 (POWER OF ATTORNEY): THIS IS HOW YOUR TAX PROS DEAL WITH THE IRS FOR YOU

You hear “power of attorney,” and you may be confused, you may be vaguely aware of a legal meaning, or you may start dozing off.

We get it – it’s a legal term. So we’ll get this part out of the way: A power of attorney (POA) is an authorization for someone to act on your behalf.

What that actually means for you and your taxes: You can authorize your tax pro to deal with the IRS for you.

Three main benefits: Preventing problems, checking your IRS status, and fixing tax issues

Tax professionals understand “IRS speak” better than most, so they can effectively navigate the IRS and call with a dedicated practitioner hotline. That’s why many people choose to file POAs, to outsource the monitoring and handling of any tax issues that may come up.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

www.advancetaxrelief.com

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CALL (713)300-3965

An IRS power of attorney allows tax pros to:

Research your IRS account to help you understand a notice, verify your good standing at the IRS, or uncover any compliance issues that you need to address.

Get copied on any notices the IRS sends you – which allows your tax pro to reach out to you if there’s anything you need to do about the notice.

Respond to an IRS notice or inquiry for you.

Set up agreements with the IRS for you, like monthly payment plans for taxes you owe or agreements on audit findings.

Represent you and advocate for you with the IRS. Common examples are when taxpayers need to argue the legitimacy of a deduction in an audit, contest a collection matter, or request penalty relief.

Deal with the IRS Taxpayer Advocate Service.

Appeal a dispute with the IRS.

Who can represent me with a POA?

Not just anyone can represent you. You can authorize specific family members to act on your behalf. But the most likely use of a power of attorney is to authorize a licensed tax professional to deal with the IRS for you.

Licensed tax professionals are usually CPAs, enrolled agents, and attorneys.

Unlicensed tax professionals can also help with audits and notices to a limited degree if they also prepared the return in question.

How to file a POA

Most of the time, people file a Form 2848, Power of Attorney and Declaration of Representative, with the IRS.

Here’s what you need to know:

You and the authorized person (called a representative) must agree on the POA representation and both sign the Form 2848.

After it’s filed with the IRS, the representative can act as you in the eyes of the IRS.

The POA stays in effect until you or your representative withdraws the authorization.

After seven years, if you haven’t already ended the authorization, the IRS will automatically end it.

Common misunderstanding: A POA isn’t the checkbox on your tax return. People are often confused when they file a return and “check the box” to give someone the authority to speak with the IRS about their tax return.

This authorization is called the third-party designee. It’s a person you name in the Third Party Designee area of your return. This authorization isn’t a POA. Instead, it simply helps the IRS if there are any issues processing the return, and it lasts only until April 15 of the next year.

There’s also a limited authorization

If you want someone to receive information related to the return (like IRS notices, IRS records, etc.), but you don’t want them to be able to advocate on your behalf, you can use the Form 8821, Tax Information Authorization.

This form isn’t limited to licensed tax professionals. You can authorize anyone to receive information through the Form 8821.

GET TAX RELIEF HELP TODAY 

If you think that you may need help filing your 2018/2019 tax return or 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 as one of the best tax relief companies nationwide.

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OFFER IN COMPROMISES (TAX SETTLEMENTS) ACCEPTANCE RATE INCREASES FOR BACK TAX DEBTS

The latest IRS Factbook is out, and among the interesting bits of information is that the IRS or Federal tax offer in the compromise program grew in many ways from 2011 to 2012. Interesting is that not only did the number of requests for offers rise but so did the acceptance rate (see below, figure 1.2 below).

Growth in Offer In Compromise Acceptance Rate and Submissions

The acceptance rate for the IRS Offer In Compromise program increased 3.60% to 37.5% for 2012. This marked a 10.63% increase in the growth of the acceptance rate from 2011 (see figure 1.1 and 1.2). Moreover, while the number of submissions grew by 8.47%, the number of OICs accepted grew by 20%.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

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offer in compromise changes 2011-2012

These changes could be the result of a still-shaky economy coupled with the IRS’s revamped Fresh Start Program in 2012, which included changes such as:

modifications to the future income calculation

inclusion of student loans, state and local delinquent tax payments into allowable living expenses

changes to how dissipated are considered

These changes made the Offer In Compromise more flexible.

 

IRS Offer In Compromise (OIC) Data 2011 and 2012

# of OICs Received OICs Accepted Acceptance Rate $ Amt of OICs Accepted

2011 59000 20000 33.9% 154,092,000

2012 64000 24000 37.5% 195,652,000

What is an Offer in Compromise?

An offer in compromise, although rarely accepted, is a way for you to pay less than you owe to the IRS if you are experiencing economic hardship. If you have a large tax liability, an offer in compromise can help you make it more manageable.

Realize, though, that an offer in compromise doesn’t guarantee that you will see your desired outcome. In 2011, there were 59,000 offers in compromise, and 20,000 were accepted. In 2012, 64,000 offers in compromise were made, and 24,000 were accepted. So, even though there was an increase of 5,000 offers in compromise between 2011 and 2012, only 4,000 more were accepted.

And, as you can see, less than half of the offers made are accepted by the IRS.

Eligibility for an Offer in Compromise

The IRS will only accept your offer in compromise if there is a small likelihood that it will receive the full amount from you. In order to be eligible to make an offer in compromise, you need to be up-to-date on filing your tax return and making your payments. Taxpayers involved in an open bankruptcy are not eligible to file an offer in compromise.

When making your offer, it’s important to carefully consider what you can pay. The IRS will take the following four items into account when deciding whether or not to accept your offer:

Ability to pay: Your overall ability to meet your tax obligation will be considered.

Income: If you have income, the IRS will consider whether or not you could reasonably set up an installment plan to pay the entire amount.

Expenses: Your regular expenses will be considered — including an assessment of how reasonable and necessary they are. 

Asset equity: The assets you have will be scrutinized by the IRS to see if you are holding back on whether or not you can truly pay.

When you make your offer, you can choose to pay a lump sum, or you can offer to make a regular payment for a set period of time. If you want to make a lump sum payment, your offer (Form 433-A) should be accompanied by a 20% “down payment.” There is also a non-refundable application fee — currently $186 — with the offer in compromise. Only by demonstrating that you qualify for Low-Income Certification can you avoid the application fee.

Really consider whether or not you truly can’t pay the full amount you owe before submitting your offer. If you do submit an offer, make sure that you are honest about the amount you can pay. Since more than half of the offers made are rejected, it’s important that you truly meet the requirements. It is highly recommended that you leverage a lawyer, CPA, or enrolled agent who has experience with Offers in Compromise as the process can be complex and tedious.

Watch Out for Scams

Be on the lookout for scams related to offers in compromise. A scammer might pose as a tax preparer and tell you that you can get out of paying your taxes with an offer in compromise. The scammer takes your money, fills out the form for you (so it looks legit), and then disappears. When your offer is rejected, you are out the money — and you still owe taxes (and possibly penalties).

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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 as one of the best tax relief companies nationwide.

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OVERVIEW OF THE IRS TAX FORGIVENESS AND SETTLEMENT PROGRAMS

Offer In Compromise, Tax Levies, Federal Tax Lien 

Owing money to the Internal Revenue Service is a terrifying situation.

Nevertheless, over 13 million Americans owe the IRS thousands or even tens of thousands of dollars every year.

The IRS can collect the debt at any time, putting the taxpayer at a serious risk of losing their earnings, savings, and other assets.

While there isn’t a specific IRS tax forgiveness program, this article covers all that anyone owing serious IRS debt should consider.

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WHO SHOULD CONSIDER AN IRS TAX FORGIVENESS PROGRAM?

Anyone who owes more money to the IRS than they can reasonably afford to pay should look at a payment plan or some kind of IRS tax forgiveness program.

By law, the IRS cannot attempt to collect back taxes if it would throw a person into financial hardship. However, the taxpayer must first demonstrate to the IRS why they cannot afford to pay up.

The IRS won’t erase all of a taxpayer’s debt if they cannot afford to pay in full in most cases. However, although rare, the IRS does provide options that allow taxpayers to pay less than they owe and settle their liabilities.

WHY SHOULD YOU APPLY FOR AN IRS TAX FORGIVENESS PROGRAM? 

Usually, it’s in a taxpayer’s best interest to seek a forgiveness program if they believe they owe several thousand in back taxes and cannot make the monthly minimum payments on an installment agreement, also known as a payment plan.

Ignoring tax debt won’t cause the IRS to realize a taxpayer doesn’t have money suddenly. Instead, the IRS will use the following channels to collect the money the taxpayer owes:

TAX LIENS

The IRS starts enforcement actions by filing a lien against a taxpayer’s assets, such as homes, cars, or boats.

Under a tax lien, the government lays legal claim to the asset and prevents its sale or transfer. The IRS won’t immediately seize the asset under a lien, but the taxpayer cannot sell the asset in most cases.

TAX LEVIES

A levy is when the IRS legally seizes a taxpayer’s assets.

Beyond physical belongings, the IRS can levy bank accounts,  retirement savings (including IRAs and 401ks), inheritance, and other financial sources.

If someone dies with outstanding back taxes, the IRS might levy their assets or even seek payment from their next of kin.

WAGE GARNISHMENTS

The IRS may garnish a taxpayer’s wages in order to recover taxes owed. They generally cannot levy your whole paycheck but it can leave taxpayers with very little left.

HOW THE IRS COLLECTS TAXES

During garnishment, the IRS takes a portion of someone’s paycheck every pay period until the debt becomes satisfied. Technically a type of levy, the IRS will contact a taxpayer’s employer or hire a third party to get the job done.

OTHER ISSUES

Depending on the amount owed, the IRS can make a taxpayer’s life extremely difficult.

The IRS might tell the State Department to revoke a taxpayer’s passport if they owe $52,000 or more in back taxes, penalties, and interest.

FIND OUT WHAT YOU OWE

Before negotiating with the IRS, a taxpayer must figure out exactly what they owe – including interest and penalties. The number might be frightening, but it’s an essential first step.

Anyone can figure out what they owe by using the IRS online tool, calling the IRS, mailing the IRS, or hiring a professional.

HOW TO SETTLE WITH THE IRS: 

The IRS offers several solutions for people who cannot afford to pay their full sum of back taxes.

On a general note, each IRS tax forgiveness program considers the following factors:

Taxpayer’s monthly income, monthly expenses, assets, and liabilities

What the taxpayer owes in total (including interest and penalties)

The taxpayer’s ability to make income in the future Physical assets and properties like cars, homes, and high-value items. Financial assets the taxpayer has like 401ks, savings accounts, IRAs, stocks, and more.

Keep in mind that each case is 100% unique. A tax professional can help you analyze your specific financial situation and choose the perfect IRS tax forgiveness program.

OFFER IN COMPROMISE 

An Offer in Compromise (OIC) is best suited for a taxpayer with severe financial trouble. The taxpayer offers to pay a specific amount, and the IRS either accepts or rejects the offer. In 2019, the IRS approved less than a third of all OICs.

GET TAX RELIEF HELP TODAY

 

 

If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company that 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 as one of the best tax relief companies nationwide.

 

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RELIEF OPTIONS IF YOU CAN’T PAY YOUR BACK TAXES

Tax Debt Help, Tax Relief Attorneys, Small Business Tax Help

Not being able to pay your taxes is likely not as bad as you think it is. Everyone has heard the stories of the IRS taking homes, cars, boats, and other things that devastate people’s lives. 

The truth is, the IRS is very willing to work with taxpayers that are having financial problems. The IRS will only pursue harsh collection actions if they have exhausted all other options and feel they are working with a taxpayer that is not willing to work with them. 

One important thing to realize when picking a method to pursue is that the IRS will analyze your financial situation and will not allow you a method that is meant for people in worse situations than your own. Below are 4 common methods used by taxpayers depending upon their tax and financial situations.

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IRS INSTALLMENT AGREEMENTS: 

This is by far the most common method for individuals to pay their taxes when they cannot pay in full. With an installment agreement the taxpayer will be allowed to pay back the taxes owed in monthly increments. If the taxpayer remains current on their monthly payments they will be considered in good standing with the IRS. 

There are actually 4 different types of installment agreements that can be used. The installment agreement used is determined by how much is owed in taxes, how much the taxpayer can afford to pay and how long it will take the taxpayer to pay off the taxes owed.

OFFER IN COMPROMISE: 

This program was designed to help the severely financially burdened taxpayers get back on track. With an offer in compromise the IRS will allow the taxpayer to settle the taxes they owe for less and they will wipe clean the remaining outstanding debt. The filing process for this is very tedious and difficult. 

The IRS does not make this program easily available to just anyone. In order to qualify the taxpayer will have to prove to the IRS that the amount they are offering is equal to or greater than the amount the IRS would ever expect to collect from the taxpayer. 

Many people feel it is unfair to let people settle their taxes owed for less but financially this makes sense. If someone is able to release their financial tax burden that they will likely not be able to pay, this can allow them to get back on track and eventually earn more money down the road and pay more taxes to the government since they won’t be financially restricted by their debts.

IRS HARDSHIP: 

If a taxpayer is in a bad situation and cannot pay taxes currently, the IRS can put a temporary hold on collections. The IRS does realize that there are times when individuals cannot pay their taxes and they do not want to make them pay them if it would end up causing financial hardship. When a taxpayer is placed on financial hardship the IRS will leave the taxpayer alone for several months and possibly several years and will check back to see if the financial situation has improved enough for the IRS to collect the taxes owed.

TAX BANKRUPTCY: 

There are a few types of bankruptcy and it is difficult to discharge tax debts using bankruptcy. With chapter 7 bankruptcy, all assets are liquidated to pay off the debts owed and there is a possibility that the remaining tax debts if all qualifications are met. Realize that with chapter 7 bankruptcy, there are many qualifications to eliminate taxes owed and most people do not meet these qualifications. Chapter 13 bankruptcy it is highly unlikely that taxes can be discharged. If chapter 13 bankruptcy is used it is likely that the taxes owed will have to be paid back through a payment plan. 

Most of the time, there is a better solution than bankruptcy to get back on track with taxes. There are some instances if you owe other debts as well as tax debt that it could be an option.

Believe it or not, the IRS kind of does have a heart. The only thing you need to know is that the IRS will be merciless until the taxpayer takes the initiative to work with the IRS and prove to them that they cannot pay. Once the IRS realizes that you cannot pay and they agree with you, they will allow you to come to some other form of agreement instead of being required to pay the taxes owed in full. It is important to work with the IRS in order to prevent them from taking collection actions.

Many times it is a good option to work with a tax professional that can analyze your situation and they can pursue the option that will fit you best financially.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or past due tax returns, you may want to partner with a reputable tax relief company that 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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OFFER IN COMPROMISE ACCEPTANCE RATES SLIGHTLY INCREASES

During the fiscal year 2018, 59,000 taxpayers submitted offers in compromise. Again, an Offer in Compromise provides struggling taxpayers the ability to settle their existing tax debt for a lower amount than what they owe. Of those offers, the IRS accepted 24,000. This represents a 40.68% acceptance rate.

 

The offers accepted resulted in the collection of $261.3 million throughout the fiscal year. In 2017, 62,000 offers in compromise were submitted to the IRS, and 25,000 were accepted. This represents a slightly lower acceptance rate of 40.32%.

 

IRS Offer In Compromise Acceptance 2018 vs. 2017

 

Fiscal Year Offers Received Offers Accepted Acceptance Rate

2017 62,000 25,000 40.32%

2018 59,000 24,000 40.68%

 

Although the IRS did report some major differences between the enforcement and activity rates in the fiscal year 2017 versus 2018, other areas remained fairly consistent. The number of audits increased only slightly, while the offer in compromise acceptance rate differed only minimally between the two years. It will be interesting to see how the numbers differ in the next fiscal year.

 

Sources: IRS Data Book 2017 & 2018

 

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

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AVOIDING BACK TAXES vs. TAX EVASION: WHAT YOU SHOULD KNOW

Tax Evasion, Criminal Tax Prosecution, Back Tax Debt

Most people are looking for a way to reduce their tax bill, but it can be daunting to figure out how to minimize tax liabilities without getting on the IRS’ radar. Despite the similar terms, tax avoidance and tax evasion have key differences that can help individuals and families make the best financial decisions for their situation.

Review this guide to find out how to reduce tax liabilities the right way.

What is Tax Avoidance?

First, taxpayers need to know that tax avoidance is entirely legal. It’s even quite common – something as simple as the earned income tax credit is a tax avoidance tool. Taxpayers frequently reduce taxable income through employee retirement plans, IRA accounts, tax deductions, and tax credits.

Tax avoidance is effectively an investment and tax planning strategy.  People can minimize their tax liabilities while maximizing the earning potential of their assets.

NEED HELP WITH BACK TAX DEBT, UNFILED TAX RETURNS OR SMALL BUSINESS TAX PREPARATION?

 

ADVANCE TAX RELIEF LLC

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CALL (713)300-3965

What is Tax Evasion?

Tax evasion is not considered a tax planning strategy. When people evade taxes, they find ways to invest in or transfer their assets to countries with lower – or no – taxes. Tax evasion can take the form of underreporting or failing to report income, as well as not paying whatever taxes are owed.

Take note that tax evasion is a federal crime in the United States. In the fiscal year 2019, the IRS completed 1,183 legal-source tax case investigations, with 663 referred for prosecution.

Tax Avoidance vs. Tax Evasion: What is the Difference?

The most noticeable difference between tax avoidance and tax evasion is legality. However, there are more subtle differences to understand that could potentially save someone time and money (or a criminal record!).

Tax avoidance is something the government encourages through tax incentives and credits, whereas tax evasion can land someone in court.

Tax evasion is an intentional effort to avoid paying taxes you owe, but tax avoidance is a deliberate effort to use resources and tools that lower tax bills.

Tax avoidance is something people can get professional help with, and tax evasion is something that professionals will actively avoid.

Thousands of tax codes offer credits and incentives to taxpayers, including individuals, freelancers, consultants, and small business owners, that want to optimize their tax avoidance strategy. Anyone who needs help paying off their taxes can find help with tax relief programs.

Tax Planning and Avoidance Strategies to Manage Tax Debt

The good news is that anyone who wants to avoid the consequences of tax evasion can use tax avoidance strategies. Professionals commonly use these critical methods.

Tax Planning Strategies

While tax planning is a dedicated professional in itself, it’s not exclusive from investment planning. Several different investment strategies can reduce tax liabilities for many individuals and families.

The most common and effective tax planning strategies include:

Contribute a 401(k) or IRA: The money people put into their 401(k) or IRA the IRS does not tax until it’s withdrawn. Many employers offer a 401(k) option with a matching contribution to help boost their employees’ retirement funds.

Revise W-4 withholdings: Most people have their income tax withholdings set to a standard amount for their tax bracket. Every financial situation is unique. Therefore, consider revising how much money is paid to the IRS to reduce tax liabilities later.

Use FSAs and HSAs: With flexible spending and health savings accounts, individuals can contribute to a dedicated account for their medical expenses. This money is specifically for medical care, so it is added to an account pre-tax.

Ultimately, investing money into financial tools that offset taxes can be a significant advantage to both long-term investment and tax planning strategies. A tax professional can help determine the best methods for each situation.

Tax Avoidance Methods

Investment strategies are just one solution for tax avoidance. The IRS offers a variety of opportunities for people and businesses to reduce their tax liabilities.

The most practical IRS tax avoidance methods include:

Itemization: Depending on how much an individual or couple’s expenses are every year, it might be more lucrative to itemize tax deductions. It can be time-consuming and requires diligent recordkeeping, but it’s especially valuable for anyone with mortgages or expensive medical bills.

Tax credits: A tax credit, which is different from a deduction, gives money back to individuals and families. These credits generally come with stipulations, so a tax professional is often the best option. However, these credits can be worth the investment for people with big tax bills.

Tax deductions: Tax deductions are another way to reduce tax liabilities. With a deduction, someone’s taxable income gets reduced, which lowers the total amount owed to the IRS. Popular tax deductions include work-related expenses, property, and real estate taxes, and contributions to charity.

Tax avoidance through the IRS can be one of the most critical tools for individuals and families that don’t have access to tax-reducing investment strategies.

Finding a Tax Relief Program That Works

Even with a dedicated approach to tax avoidance, many people still wind up owing the IRS at the end of the year. Moreover, for some families, owing money to the IRS or state creates a severe burden that snowballs over the next year.

There are options for people who are struggling to pay their tax debt. To find the right tax relief program, a professional tax firm can help narrow down the right option for each situation.

GET TAX RELIEF HELP TODAY

If you think that you may need help filing your 2018/2019 tax return or 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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