Tax Talk - The 20/20 tax resolution blog

Using the Internet as a tool to start or run your business can be both frustrating and enlightening at the same time.  The information you need is all out there, but it needs to be corralled into to some sort of order to be truly useful.  Fortunately,  we at 20/20 Tax Resolution have come across what you’ve been looking for in one place that will help you find almost anything for your business regarding your legal requirements and assist you in locating the necessary government services from federal (IRS), state, and local agencies.

Business.gov is an official site of the U.S. Small Business Association that has information on everything from business plan assistance to business law to incorporating your business, and a great deal more.

One tool we find particularly useful for our clients is the State and Local Resources page where all there are step-by-step instructions for complying with state and local regulations in your state.  Just click on your state and all the respective information will be available in one place.

According to Business.gov, every business needs one or more federal, state or local licenses or permits to operate. Licenses can range from a basic operating license to very specific permits,

Regulations vary by industry, state and locality, so it’s very important to understand the licensing rules where your business is located. Not complying with licensing and permitting regulations can lead to expensive fines and put your business at serious risk.

Therefore, the Business.gov Permit Me tool is extremely helpful to ensure that all the licenses, permits, and registrations needed to run your business are accounted for.

This is just the tip of the iceberg with the information provided on Business.gov and other Internet resources. It can be challenging on the Internet to compile all the information needed to run your business in one place, but we think Business.gov is a solid place to start.

Please remember that if you have any questions regarding your tax compliance issues or any tax liability situations, we are available to assist you in anyway we can.  Please contact us at 20/20 Tax Resolution so we can be an additional resource for you.

20/20 Tax Resolution wants to share some of our pictures with you.  So we’ve developed our Flickr page where you’ll find pictures of some of our charity community work, involvement with the IRS and practitioner community organizations, and numerous other 20/20 Tax Resolution activities.

We hope to “see” you at the 20/20 Tax Resolution Flickr page.

20/20 Tax Resolution Senior Tax Consultant David Miles, E.A. was recently published in The National Association of Enrolled Agents (NAEA) March-April 2010 bi-monthly publication, EA Journal. Miles’ article, “A Closer Look at the Disqualified Employment Tax Levy” was ultimately the lead and cover article that was distributed to its 11,000 tax professional members.

For those who are unaware of the presence of the NAEA, according to their website, “The NAEA is the professional society representing enrolled agents (EAs), which number some 40,000 nationwide. Its 11,000 members are licensed by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service (IRS), including examination, collection and appeals functions.

While the enrolled agent license was created in 1884 and has a long and storied past, today’s EAs are the only tax professionals tested by IRS on their knowledge of tax law and regulations. They provide tax preparation, representation, tax planning and other financial services to millions of individual and business taxpayers. EAs adhere to a code of ethics and professional conduct and are required by IRS to take Continuing Professional Education. Like attorneys and certified public accountants, enrolled agents are governed by Treasury Circular 230 in their practice before the IRS.”

Miles’ article is constructed as guidance for the practitioner community, but it does have valuable insight to the IRS’s approach to businesses that are continuing to owe employment taxes quarter after quarter.  His closer look into the IRS’s new collection tool, The Disqualified Employment Tax Levy, proves to be informative for both tax practitioners and business taxpayers.

20/20 Tax Resolution is proud of Miles’ position as not only an advocate for the taxpayer, but also as a leader and contributor to the practitioner community.

To read Miles’ article in its entirety please click here.

Please contact 20/20 Tax Resolution with any further questions regarding this article.

From time to time the IRS delivers some tax tips to us that we’d like to share with you.  This one is exceptionally timely with the April 15^th tax deadline approaching.  Please be sure to contact us at 20/20 Tax Resolution if you have any questions.

Will you be making a payment with your federal tax return this year? If so, here are 10 important things the IRS wants you to know about making tax payments correctly.

1.  Never send cash!

 2.  If you file electronically, you can file and pay in a single step by authorizing an electronic funds withdrawal via tax preparation software or a tax professional.

 3.  Whether you file a paper return or electronically, you can pay by phone or online using a credit or debit card.

 4.  Electronic payment options provide an alternative to paying taxes or user fees by check or money order. You can make payments 24 hours a day, seven days a week. Visit IRS.gov and search e-pay, or refer to Publication 3611, e-File Electronic Payments for more details.

 5.  If you itemize, you may be able to deduct the convenience fee charged for paying individual income taxes with a credit or debit card as a miscellaneous itemized deduction on Form 1040, Schedule A, Itemized Deductions. The deduction is subject to the 2 percent limit.

 6.  Enclose your payment with your return but do not staple it to the form.

 7.  If you pay by check or money order, make sure it is payable to the “United States Treasury.”

 8.  Always provide your correct name, address, Social Security number listed first on the tax form, daytime telephone number, tax year and form number on the front of your check or money order.

 9.  Complete and include Form 1040-V, Payment Voucher, when sending your payment to the IRS. This will help the IRS process your payment accurately and efficiently.

 10.  For more information, call 800-829-4477 for TeleTax Topic 158, Ensuring   Proper Credit of Payments. You can also find out more in Publication 17, Your Federal Income Tax and Form 1040-V, both available at IRS.gov

Company.com, a  has come up with 10 ways to reduce your risk of an audit.  It is important to note that there is no foolproof guide to avoiding an audit, but by following these ten tips your risks could be diminished.

1.       Make your business a business, not a hobby. If you are in your third year of business and reporting a third year of losses, that’s going to raise a red flag with the Internal Revenue Service. Despite what you might think, the IRS isn’t evil, and if you show them the evidence, they’ll understand that you’re a loss-making small business — for a while. If you’re in year four and still making a loss, expect a call from the IRS about when you plan to start earning money.

2.       Report your income accurately. If a client pays you $3250 for a service you provide, and you round that down to $3000 while your client reports the actual number, that’s a red flag, too. It tells the IRS that you’re not keeping accurate records — and they do cross-check that stuff.

3.       If you use a CPA or tax preparer, understand what they’re doing and why. If you’re uncomfortable with something, ask them to explain it till you are comfortable or they do it your way (as long as it’s legal.) Why would you do that? You do it because you’re responsible for the accuracy of your company’s tax return, even if someone else prepares it — and that means that you, not your preparer, will be liable for any additional taxes, interest charges, and penalties if you get audited. If your tax preparer promises to save you a huge amount of money, don’t trust it. The only way to save huge amounts is to cheat.

4.       Prepare to be audited from the first of the year to the last. If you keep your receipts, journal your expenses and mileage as they are incurred, and keep accurate records of your income, you’ll be able to show that you’re not guessing at your numbers. Show the IRS auditor that you can’t get the easy stuff right and you’re just inviting a more thorough examination of your finances. Mark Green, IRS Spokesperson for Georgia, told company.com that keeping good records of expenses as you incur them is “a must” for all businesses.

5.       “Pay estimated taxes if you’re a sole proprietor or independent contractor. Pay them on time, and keep them current.” Green said.

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Susan Taylor Martin of the St. Petersburg Times wrote a very interesting article on the U.S. anti-IRS sentiment that has been brewing in the collective American psyche for nearly half a century. Martin’s article was in response to the Texas software engineer who recently flew a plane into the Austin IRS building after years of being disgruntled by the existence of the IRS.  Also recently in the news was the Ohio man who bulldozed his home after the IRS placed liens on his properties and was facing foreclosure.  Thankfully, this type of destruction is a rare occurrence and, as Martin’s article points out, is representative of an extreme example of the existing anti-IRS sentiment.

However, this “sentiment” has presented itself enough times that the IRS has developed a separate agency, The Treasury Inspector General for Tax Administration (TIGTA), to handle the threats directed at the IRS. All TIGTA’s investigations from 2004 through 2010 are listed directly on TIGTA’s website with highlights of the numerous threats, bribes, and criminal behavior directed towards the IRS.

Over the years 20/20 Tax Resolution has seen thousands of businesses and individuals in extremely stressful conditions as a result of their back tax scenarios with the IRS and State tax authorities.  Owing back taxes is never an easy position to be in, but there are logical and rational approaches to address the situation.  Contacting a tax professional for guidance is the best first step.

We understand that owing back taxes in any amount can be scary and emotionally draining.  But they’re called back taxes for a reason.  Everyday with 20/20 Tax Resolution’s guidance, support, and partnership, our clients get to move forward with that taxing emotional weight lifted from their lives.  We get results and want you to be a part of our successes.

There are thousands of 20/20 Tax Resolution success stories.  Here’s a recent one:

Click on the picture at the beginning of this post and you’ll see an agreement that 20/20 Tax Resolution recently negotiated with the IRS for a client.  This client came to us owing over $175,000 in back taxes to the IRS.  His case was assigned to a Revenue Officer who had levied his bank accounts multiple times and was threatening a garnishment.  20/20 Tax Resolution was able to quickly assess the situation, prevent additional collection enforcement, and negotiate a $500 monthly Installment Agreement that will potentially save our client over $100,000 as the statute of limitations will expire long before the total debt is paid.

If you have any questions or need any assistance please contact us for a free consultation.

Now is the time to move forward with your life.