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IRS Compliance for Non-Filers Get Ahead or Get a Levy
More than 22 million taxpayers in the US have either failed to file a tax return or are behind in paying their IRS and state taxes due Before the COVID-19 pandemic!
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Whatever your situation, a federally-authorized tax practitioner with technical expertise in tax resolution can empower you to deal with your IRS issue and get you into voluntary filing compliance. For your own financial security and well being, the sooner you get into compliance, the sooner the IRS will negotiate to resolve what you owe them. A qualified tax resolution specialist will negotiate on your behalf to achieve the best outcome and advise you of available options to ensure favorable results. Relief from the psychological burden of owing the IRS helps you feel lighter and stress free. Rediscover peace of mind! Why a Tax Resolution Specialist vs. My CPA? Most business owners know to call their CPA to prepare tax returns or handle bookkeeping tasks. Far fewer know an IRS enrolled agent (EA). An even smaller group have an EA in their contact list who specializes in tax resolution work. CPAs have a state license to practice public accounting. If you are a publicly-traded company that requires annual audits of financial statements in compliance with Generally Accepted Accounting Principles (GAAP), then hire a CPA. It's what they're licensed to do by their respective state Boards of Accountancy.
Failure To File Your Tax Returns Puts You, Your Business, and Family at Serious Financial Risk
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The U.S. deficit has soared over the past few years and the Department of Treasury is using every tool in its arsenal to boost revenue. Therefore, the IRS is very aggressive in pursuing high income taxpayers who have not filed returns in the past and are known as non-filers. Will you be their next target? If you haven't filed your personal or business returns for one year or more and you owe at least $50,000 in back taxes, then you can bet the house and car that penalties and interest are snowballing each day that you don't file the returns. It doesn't take long for it the balance to grow so large that it consumes every asset that you own. You've worked hard to reach your goals in life. Losing everything to he IRS is preventable. The whole process of filing back tax returns can be overwhelming. You're busy and life always seems to get in the way of being a responsible citizen of our great country. A divorce, illness, business failure, or death of a loved one can sidetrack anyone. Perhaps you don't have the cash to pay your taxes and you thought it a good idea to file them when you have the money. Tip: This is NEVER a good strategy. Another common situation that we see is when a current or former spouse promised to file a joint return and then: didn't file the returns as promised filed the returns but didn't file them correctly filed the returns but didn't pay the balance due Sometimes the IRS will offer relief to an "innocent spouse" and correct or eliminate the delinquent account within certain guidelines.
CPA firms hire seasonal staff to prepare tax returns but it's not their primary duty year round. An EA, on the other hand, is granted his/her credential direct from the IRS after passing a rigorous 3-part exam and background check. It's a federal credential that empowers the holder to represent taxpayers before all administrative levels---examination, collection, and appeals---of the IRS. Period. Providing tax expertise in one form or another is what EAs do 365 days a year. While it's true that a CPA can represent clients before the IRS, an EA has a federal credential that is recognized in all 50 states! That means that we can share our expertise with clients who need skilled U.S. representation wherever they reside. The focus of an EA on tax-related matters cannot be overstated. Tax resolution is a specialized niche. Not every EA is a trained resolution specialist. However, there are even fewer CPAs who can successfully work a tax resolution case. Doing so requires a much deeper understanding of IRS Collection Standards, IRS transcript analysis, Freedom of Information Act (FOIA) requests and when to make them, Reasonable Collection Potential (RCP) and much more. There are many options that the IRS makes available to resolve tax matters. It's critical to understand which solution works best. It's complicated. Your chances to conclusively settle a tax assessment issued by the IRS when you file past due returns are greatly improved when you have an EA on speed dial who specializes in tax resolution work. IRS Debt Adds up Quick The cost of ignoring an IRS notice is high---by design! The U.S. tax system is based on voluntary compliance. Citizens are expected to pay their tax liability when a lawful assessment is issued by the IRS. Failure to comply will set off serious consequences.
Although the IRS makes every effort to encourage voluntary compliance, they can and do pursue non-filers with vigor. Chronic non-compliance can lead to a criminal referral. The purpose for these actions is to discourage others from engaging in similar behavior. An original assessment by the IRS lays the foundation upon which additional fees flourish. They pile on top of each other like a snowball rolling down a mountainside. Principal + interest + penalties grow and grow while threatening to devour every dollar that it comes in contact with. Don't bank on hiding from the IRS forever when you owe them a substantial amount of money. Failure to File Penalty: 5% (of assessed taxes due) for every month (or part of a month) the original return is filed past its due date (max 25%). Failure to Pay: 0.5% per month (max 25%) Interest: On the assessed tax due. Based on the number of days late beginning with the original due date of the return and ending when a final payment is made by an acceptable method to the IRS or when an alternative resolution is reached to close the case. Assessed Balance Due: The original assessed principal balance is constant. It functions like a fee generating machine. Partial payments, if any, are first applied to outstanding interest and penalties. Unless you cover them first, zero dollars are applied to reduce the original assessed principal balance. Businesses fail and owners go bankrupt under the weight of debt that grows so aggressively. It's easy to miscalculate the real costs imposed on non-filers and for most it's never worth it. The most important thing for a non-filer to do is to get your back taxes filed as soon as possible even if you can't pay what the IRS says that you owe them. It's a fallacy that the IRS can't come after you if you don't file a tax return. Waiting just increases your tax bill. File the return first and then deal with the collection issue swiftly.
When you fail to file a return, the IRS will file one for you. For business taxpayers, if you receive a 1099 or issue yourself a W-2, then the IRS will use the information it has on file for you to complete an income tax return. They will allow you a standard deduction and personal exemption. The IRS will calculate the tax liability, penalty for failure to file, and interest due. Now that a Substitute for Return (SFR) is filed, the IRS can send you the bill. Why is an SFR not in your best interest? Simply put, the IRS protects its own interests not yours. When you let them prepare an SFR, you waive itemized deductions, allowable business expenses, cost basis and other favorable deductions that lower your tax bill. Best practice is to recreate your past due returns with a competent tax professional before you file them. It's up to you to protect your financial interests and not the IRS. When you empower them to file a return on your behalf, you can be certain that the tax bill will be much higher than if you filed the correct tax return(s) yourself. So what if your business fails and you file personal bankruptcy. It's a lawful way to wipe out debts for a fresh start. Right? Wrong! The year that the IRS files an SFR on your behalf is one that can never be discharged through bankruptcy. That's right. The IRS files an SFR for TY 2016, and your 2016 tax liability survives a 2021 Chapter 7 filing. No matter what year after 2016 that you file, the 2016 tax liability remains outstanding until paid in full. Even if you file the actual 2016 return and correct the liability, the fact that an SFR was filed in that year excludes TY 2016 from future discharge in a bankruptcy filing. An SFR filed on your behalf suggests that you did not follow the tax laws that year. The IRS protects its interests and not yours. Finally, if you are due a refund, you have three years to file a tax return and claim it.
" It's up to you to protect your financial interests not the IRS"
SFR
After three years you forfeit all refunds from the IRS for an over payment of federal income taxes that is owed to you. Consider it a "donation" to the U.S. Department of the Treasury. For example, you didn't file a return for TY 2016. You can claim a refund if you file an actual return on or before TY 2019 (statutory due date is 4/15 for personal returns). After that the refund is gone. What happens when the IRS doesn't have third-party documents like a 1099 on file for you? It's get a little complicated but an SFR will be created just the same. Hire a good accountant because your books and records will be summoned for review by an IRS field Revenue Officer (RO). You have two choices: File the missing tax return(s) with the RO Appear with your books and records so an RO can create the return(s) for you. An RO cannot compel you to create a return that does not exist on the date of the summons. He or she can compel you to produce books and records that do exist when a summons is issued. If you need to recreate books and records in response to an IRS summons, we have a specialized team of bookkeepers who can help you with this daunting task.
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Substitute For Return (SFR): It's Never a Good Idea For the IRS to Estimate and Complete Your Return For You
A Tax Professional Can Help.
A specialized EA can help you: Respond professionally to IRS correspondence Evaluate IRS transcripts to see where you stand in the collection process. Analyze your financial position to determine Reasonable Collection Potential (RCP). Prepare and file any delinquent income tax returns. Help you collect records and receipts to reconstruct your bookkeeping for accurate accounting. Determine most effective way to resolve your issue based on RCP. Represent your case before the IRS for a more favorable outcome. Contact us for a no obligation situation analysis so we can understand your specific tax situation and provide advice on the options available to you. Your tax issue is handled with the utmost confidentiality and discretion.
There are many national chains out there that would like to help you with your tax problems. We make no claims to be able to settle IRS debt for pennies on the dollar. Most of our clients say they prefer to hire a local tax professional in their own neighborhood. People are not proud about the position they find themselves in with the IRS. We understand that discretion is important and you don't want to be sold.
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V.I.P. member services include:* Detect IRS audits & exams to allow timely mitigation of penalties & interest. Detect IRS liens and levies. Identify penalty abatement opportunities (3-year look back) and facilitate refunds or offset of taxes owed. Audit risk assessment for the current tax return. Annual income matching verification to prevent under reporting penalties. IRS payment tracking including estimated payments. One amended return per year (personal or business) One comprehensive Tax Analysis Report per year. *Requires a signed IRS Form 8821 for each individual and entity (POA)
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