Author: 20/20 Tax Resolution

20/20 Success Story: Douglas

Tough times and tough decisions forced couple into bankruptcy, losing their business and leaving them with hundreds of thousands in unpaid tax debt.

Situation:

As any business owner will attest, managing a company can be a delicate balancing act. During prosperous times, it’s easier to keep a steady ship. But when challenges arise, difficult decisions made under duress can come back to haunt you.

That’s a business lesson not unfamiliar to Douglas Smith and his wife, Dana. The one-time co-owners of an ambulance service provider had managed their successful business for many years until tough times forced the couple to make arduous economic choices. Squeezed between paying employee salaries and keeping current on all tax obligations, the couple chose the former – thinking they would “catch up” when financial pressures eased. However, as interest and penalties accumulated, the unpaid taxes became a hurdle too big to overcome. Forced into bankruptcy and struggling to pay bills and keep the company, the Smiths were distressed and disillusioned.

“There were some extraordinarily dark times,” recalled Doug Smith. “It certainly wasn’t the most joyous of times or the most anticipated of consequences.”

Analyzing Business Data - pen and numbers on paper

The Problem:

In the case of the Smiths and their business operations, there were actually multiple problems – all requiring attention at once. But perhaps the most pressing issue was the constant pressure from the IRS to settle the matter. Faced with a struggling business and a tax bill reaching “hundreds of thousands” of dollars, the Smiths were under an increasing amount of stress both at work and at home.

“You still have to pay your bills,” Doug said. “You still have to try to make your business work. We were still running the company trying to get a contract so we could get out of this mess. It was not good times.”

“There was a lot of stress. A lot of emotion,” Dana added. “We saw a lot of tears.”

With such a large amount of money owed and no way to pay it, the Smiths were becoming concerned about the potential consequences, including the fear that jail time might be a possibility.

“I don’t really know if it was a possibility but we’d heard stories,” Doug said. “Certainly with over a hundred thousand dollars at stake, I’m not sure how forgiving a prosecuting attorney would be if it had ever gotten to that point.”

Fortunately, it never did.

The Solution:

With the recognition that their tax troubles were only getting worse – and a desire to move forward with their lives in a positive way – the Smiths decided that professional help was in order. Disappointed by the lack of support they were finding in their community, the couple was understandably wary of seeking outside help. Yet, the Smiths needed help from someone familiar with, and adept at, solving the tax problem they were facing. Fortunately, 20/20 Tax Resolution possessed the exact experience the couple required.

“I did research online just to look for relief,” Doug said. “When I checked 20/20 Tax Resolution, I also checked their Better Business Bureau rating and decided they were the ones I wanted to call.”

Satisfied with 20/20’s BBB, the Smiths contacted the firm and were quickly blown away by the attention to detail and responsiveness of their 20/20 representative.

“They were very understanding and very clear on what we needed,” Doug said. “We were moving forward and making good progress when my bankruptcy came back to throw a bump in the road.”

During the process of finalizing an Offer in Compromise (OIC) with the IRS, it was determined that the Smith’s bankruptcy filing had not been “fully discharged” – which means the couple possessed remaining assets not considered in the OIC. (An OIC allows qualified individuals with an unpaid tax debt to negotiate a settled amount that is less than the total owed.) As a result, the original OIC was returned, but Doug said that 20/20’s commitment to resolving their issue never wavered.

“They were diligent, caring and showed the highest integrity,” he said. “My case took a few curves and hit some bumps along the way, but all were masterfully handled by them. I have nothing but the greatest of praise and highest recommendation for anyone needing 20/20’s tax resolution services.”

After a very long process, a new OIC was secured for the Smiths which effectively reduced their debt to a fraction of the couple’s original tax debt. (You can view the actual OIC here.) For the first time, the Smiths could see a light at the end of their very long, dark tunnel.

“For anyone going through this, I would say find a very good advocate for yourself,” Doug said. “I believe I found an excellent advocate at 20/20. My team was worth a million bucks. They were there whenever I had an issue. Sam Million and his assistant, John Casanova (the Smith’s 20/20 team) were exquisitely talented in helping with my case and understanding the stress I felt throughout the case. Thanks to their efforts our life has improved considerably.”

In fact, Dana said the assistance of 20/20 may just have saved the couple’s marriage. Today, the Smith’s are “starting over” and rebuilding their lives free of the worry and burden that overtook their lives for nearly six years. If everything works according to plan, the couple will purchase a new home this year – something unimaginable just a few short months ago.

20/20 Success Story: John

Facing tens of thousands in owed back taxes, Texas man turned to 20/20 Tax Resolution and discovered the meaning of sweet redemption

Situation:

John Mohan lived his life on the edge – but without ever realizing it. An electrician by trade in the small Texas town of Alvin (located about 40 miles south of Houston), John worked as an independent contractor for many years and never bothered to file a tax return for any of his contracting income. It wasn’t a conscious decision to disregard a responsibility, but more of an oversight that over time became an “outta sight, outta mind” kind of habit. Similar to others in the construction industry, John worked a variety of jobs over the years, ranging from electrician to carpenter. But when John took a job with a larger company that withheld taxes from each paycheck, the Internal Revenue Service took notice.

“I received a letter saying that I owed $4,000,” John, 53, said. “So I assumed that’s all they wanted and I went in to the IRS to try and finance that $4,000. That’s when they said ‘Wait, that’s $4,000 for ONE year.’ They wanted immediate filings for the last six or seven years.”

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The Problem:

Like so many in the construction industry, John hadn’t kept meticulous records of his past earnings. He couldn’t afford to hire an accountant to help him go back nearly a decade and determine all the revenue he had earned and how to file his back returns. He was, in his own language, “devastated.” And the IRS was breathing down his neck.

“I wanted to just quit my job,” he said. “The IRS was threatening to garnish my wages right off the bat. I’ve heard horror stories about people going through this and I just had no idea what I was going to do. I had no idea where to even begin with something like that.”

John left the IRS office that day feeling sad, depressed and “all alone.” He knew he could be facing an insurmountable amount of back taxes and penalties. Losing sleep and worried about his economic future, John owed nearly $45,000 in back taxes spanning multiple years.

The Solution:

In what could be called an amazing coincidence, John returned home from the IRS to find a letter in his mailbox from 20/20 Tax Resolution. He had never heard of the Colorado-based firm with more than two decades of experience helping people just like him.  The letter arrived at the perfect time for John to take action.

“That really got the ball started,” John said. “Just contacting 20/20 really started to emotionally put me at ease.”

From the very onset of working together, 20/20 was able to remove the fear, worry and unrest John was constantly feeling about his tax situation. An aggressive IRS was sending John threatening letters and communicating ultimatums John wasn’t able to fully understand.

“They said don’t worry about it, just send the letters to us,” John said. “Every time I got a letter, I would pick up the phone immediately and call 20/20.”

That attention and compassionate assistance made a world of difference to John. He was able to better focus on his work and life – and remove the doubts and concerns from his mind. He was a bit concerned at the outset that 20/20 was located in Colorado while he lived in Texas. But those worries were quickly displaced by gratitude.

“I actually forgot about the whole situation a lot of times,” he said. “20/20 was just great. Those people are awesome. They even worked with me on creating a payment plan for the cost to resolve my situation.”

In the end, John received the greatest news of all: 20/20 was able to successfully negotiate an Offer in Compromise for John with a settlement of only $234! Although he’s still in the process of getting liens removed and he will need to stay on top of future tax obligations, John feels 20/20 helped him dodge a bullet that would have hampered his life for many, many years.

“I feel very blessed that I called 20/20,” John said. “I’d recommend anyone who has any tax problem at all to call 20/20. They are outstanding people.”

Tax Tip: What to do post resolution

Whew! You made it through to the other side! Congratulations on navigating the difficult maze of regulations, processes and emotions to successfully finalize a resolution to your tax problems. Time to relax, forget about the past and move on to a better future, right?

Well, not exactly. During 20/20’s two decades of working with clients, we’ve seen the pitfalls that can await taxpayers on the other side of the resolution process. We strongly advocate that our clients create a “post-resolution plan” to help them steer clear of future problems. Without a thoughtful approach to your new reality, the chances of needing additional help down the road increases.

The first step is to make certain you understand all aspects of your resolution, any payment plan that may be in place, the expected duration of the plan and – perhaps most important – how you will pay it. Don’t wait until your first payment is due to fully comprehend everything you agreed to in the resolution. Delaying this step is what typically leads to a first mistake: missing a payment (something you don’t want to do).

To avoid missing any payment deadlines, consider scheduling a direct deposit. If you choose to use traditional U.S. mail for your payments, remember that each payment must be received by the actual due date. Unlike filing a tax return, payments are not considered to be on time by their postmark. If you opt for snail mail, make certain to leave enough time for the post office to punctually deliver the payment.

A lot of managing your resolution just comes down to staying on top of it and identifying problems before they occur. At 20/20, we have been very successful at setting up manageable resolutions for clients for 20 years. We’ve found that very often, the root cause of problems can be traced back to a taxpayer’s individual habits, business practices or organizational skills.

While some businesses struggle to stay current due to genuine financial hardship, we often see business owners and officers neglect to establish effective business practices. One of the most effective ways to ensure compliance is to engage the services of a payroll firm. At 20/20, we partner with payroll and sales tax solutions in order to assist our clients in developing good and effective business practices. It’s important to make an honest assessment of your business and lifestyle to see if these solutions are right for you and your company.

Ask yourself the tough questions: Is your business undercapitalized? Are you overspending? Are there lifestyle changes you should consider to help keep you on better financial track? All of these are important considerations to study to keep you moving forward and avoid future tax problems.

Light at the end of the TunnelFinally, now that you have what probably feels like a new lease on life, don’t take it for granted. Keep vigilant on your resolution and be proactive if and when you have any problems surrounding the payment terms. Remember that communication is key to staving off future issues with the IRS or other tax authorities. Don’t hesitate to speak up when problems arise.

If you’re still concerned about the ability to successfully manage your resolution and steer clear of future problems, 20/20 offers a monitoring program called POA+. POA+ is a monthly, pay-as-you-go service that allows 20/20 to maintain an active role in your tax resolution plan. Our team will be able to receive and monitor notices from the taxing authorities to promptly address issues that arise as well as remain available to answer questions.

However you proceed, enjoy the relief that comes from knowing you are managing your tax obligations and taking the best care of your business. And be certain to stay on top of your resolution requirements! If things ever get out of hand again, remember that 20/20 is here to help.

Tax Returns: Why We Procrastinate

A quick online search of “tax returns” brings up all kinds of conflicting advice. Should you file early? Should you wait for the deadline? Is it damaging to file an extension? There are “experts” out there who will give you the opposite answer for each of the three questions. It’s no wonder people want to cover their heads and just wait until May. But what exactly is causing so many people to delay?

If you fall into one of the above categories (or you’ve cleverly created a new reason to procrastinate of your own), don’t worry. You’re in good company. According to the IRS, about one-third of Americans will wait until the last minute to file their taxes. In fact, in 2016 more than 29 million individual returns were filed between April 8th and Tax Day (this year it falls on April 17, 2018).

So kick back, relax and take your time. After all, it’s only March.

Fight Back Against Scams

It’s tax season, which means that tax scams are on the rise. It’s likely you – or someone you know – has received a suspicious email, phone call or even snail mail and wondered “can this be real?” If you answered “no,” congratulations! You just saved yourself a mess and headache. But unfortunately, thousands of Americans lose millions of dollars as well as their personal information to tax scams each year, according to the IRS.

It’s why the IRS regularly issues “Scam Alerts” to warn taxpayers against the potentially damaging scams. What’s even more alarming is that rip-off artists working to rid you of your money or your identity are finding increasingly clever ways to reach into your pocket. In addition to ordinary taxpayers, scams now target tax professionals, human resource/payroll departments and others. Nearly any entity that might possess your private information can be subjected to a tax scam.

Most recently, an IRS Scam Alert warned of a complex scam where criminals steal client (i.e., taxpayer) data from tax professionals and then file false tax returns under these clients’ names, using the clients’ real bank accounts for refund deposits. Scammers then use a variety of different methods to take back the money once it’s deposited – sometimes even posing as IRS officials and threatening the victims. You can read the full Scam Alert here.

So, what can you do to protect yourself? The first step is to know how the IRS operates and to become somewhat familiar with the types of scams out there (although they are constantly changing and adapting): tax tips tray

IRS protocols. The Internal Revenue Service will NEVER initiate contact with taxpayers by email, text message or social media platforms to request personal or financial information. If this happens to you, it’s a surefire sign someone is trying to scam you.

Deceitful practices. As mentioned above, tax scams come in all kinds of forms – and are delivered to victims in snail mail, email, text message or phone calls. Don’t be fooled by professional looking letterheads and logos or official sounding tax issues raised in the communication. If you have any doubt at all as to its authenticity, do not respond in any way and contact someone you trust to verify the communication.

Variety of scams. As the earlier example demonstrates, scam artists are a clever bunch. There are a variety of ways they will try to wriggle personal information out of you. Whether by asking you to provide private information (“phishing”), impersonating IRS personnel via telephone calls or directing you to official looking websites that infect your computer with malware (making you vulnerable to hacking), criminal scammers will stop at nothing to steal your money.

So consider this a primer to the basics of tax scamming you need to know to protect yourself and your private information. Remember that the IRS will not contact you and request private information arbitrarily via email or text. And finally, always say no to information requests that you are not absolutely, 100 percent positive are authentic.

To get more information about tax scams and how to identify them, read this comprehensive IRS Tax Scam Alert.

Pay Your Taxes, Protect Your Passport

If you’re planning on taking an international trip anytime soon, you may want to make certain your taxes are paid in full – or that you have entered into a payment agreement with the Internal Revenue Service for any back taxes owed. If not, your passport could be at risk.

That’s the message the IRS delivered in January when it announced implementation of new procedures affecting individuals with “seriously delinquent tax debts.” According to an IRS press release, the new enforcement policy impacts primarily those owing $51,000 or more in unpaid back taxes for which the IRS has filed a Notice of Federal Tax Lien and the period to challenge it has expired – or the IRS has issued a levy.

“This enforcement action has been in the works for a number of years and is the result of legislation passed in 2015 that requires the IRS to notify the State Department of taxpayers owing a seriously delinquent tax debt,” said Brian Biffle, president of 20/20 Tax Resolution. “However, many taxpayers impacted by this legislation may not be aware of it or may not understand the serious implications of it.”

US PassportFailure to pay unpaid taxes or create a payment plan could lead to denial of a passport application or even denial to renew a passport, according to the IRS. In some extreme cases, the FAST Act – which was signed into law under the Obama Administration in December 2015 – requires the State Department to revoke a passport for unpaid taxes.

“This is very serious for those who travel internationally, especially for a person whose business depends upon international travel,” Biffle said. “To be absolutely certain you are safeguarded from these enforcement actions, taxpayers that owe unpaid taxes should be certain to come forward and deal with any debt they might owe.”

This same legislation, known as the “FAST Act” (for “Fixing America’s Surface Transportation” Act), details the ways travelers can avoid the new passport constraints:

  • Pay any unpaid tax debt in full
  • Pay the tax debt under an approved installment agreement
  • Pay the tax debt under an accepted offer in compromise
  • Pay the tax debt under the terms of a settlement agreement with the Department of Justice
  • Having requested or have a pending collection due process appeal with a levy
  • Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief

According to the IRS press release on the matter, the following taxpayers won’t be at risk of this new enforcement program:

  • Any taxpayer who is in bankruptcy
  • Any taxpayer identified by the IRS as a victim of tax-related identity theft
  • Any taxpayer whose account the IRS has determined is currently not collectible due to hardship
  • Any taxpayer located within a federally declared disaster area
  • Any taxpayer who has a request pending with the IRS for an installment agreement
  • Any taxpayer who has a pending offer in compromise with the IRS
  • Any taxpayer who has an IRS accepted adjustment that will satisfy the debt in full

To review the full IRS press release, visit the IRS website.

[INFOGRAPHIC] NEW YEARS RESOLUTION: PLAN NOW FOR 2018

According to IRS data, nearly one third of Americans wait until the last minute to file their taxes. With numbers that high, it’s no surprise that our clients are often a part of that percentage. The delay is primarily due to insufficient preparation – and the dread that comes from facing all the paperwork scattered throughout your office. But it doesn’t have to be this way.

Here are the most important things you should resolve to do NOW to ensure you are setting yourself up for a successful year.

Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

2017 Year in Review: Top Tax News

No matter your perspective on the recent passage of tax reform, there’s no question it is the biggest tax story of the year – and perhaps of the decade. The estimated $1.5 trillion bill is being touted as the savior of the middle class and simultaneously denounced as just another exercise in trickle-down economics. Time will tell how the expansive bill shakes up the economy, but with provisions impacting everything from health care to the standard deduction, the reform is sure to impact just about every American in some way.

Business man holding TAX on blurred abstract background

The rest of 2017’s tax stories are not quite as dramatic, but important nonetheless. Here’s a rundown of the top tax news of the year:

  • Employment taxes: The IRS stepped up efforts to combat delinquent employment taxes in the wake of a scathing report in May from the Treasury Inspector General for Tax Administration. The IRS watchdogs reported that the number and size of payroll tax violations is going up, and IRS penalties alone have not been enough to stop the trend. Although the willful failure to remit employment taxes is a felony, there have historically been fewer than 100 criminal convictions per year.
  • Use of private debt collectors: In June it was announced that the IRS began using private debt collectors to try and recoup overdue money owed the government. The IRS program engages four private-sector collection agencies to pursue the toughest debt. Generally these are cases where money has been owed for multiple years and the case is not currently being worked by federal employees.
  • Tax reform impact on delinquent taxes: A change in pass-through taxation, which impacts taxpayers who have some or all of their business income taxed on their individual return, could aid S corporations, LLCs, partnerships and sole proprieterships. As a result, these entities might have fewer challenges meeting their tax obligations. However, tax reform is not expected to have a major impact on tax resolution needs. As always, “life happens” so some people will owe – and some of those people will inevitably need tax resolution services.

The biggest story of the year may be that nothing really changes. The need to have a solid tax plan in place for individuals and businesses is still essential. Be certain to plan ahead for tax obligations, monitor your business throughout the year to guard against revenue ebbs and flows – and make certain you always have a plan to pay.

Happy New Year to you and yours, and best wishes for a profitable 2018!

Top Five Concerns of People Facing IRS Action

You’ve received a letter from the IRS telling you there’s a problem with your taxes. You’re not entirely clear on what the letter means. Yet you are sweating a little. You’re nervous about what happens and what steps you should take next. You’re anxious and are tempted to ignore it all.

Here’s your first step: DO NOT IGNORE THE IRS NOTICE. For your next step, read the following concerns that 20/20 most often hears from clients calling our office for the first time. With our 19 years of experience helping people overcome tax difficulties, we’ve heard just about every concern. Here are the top five concerns common to our clients. Taking Notes

1. Aggressive enforcement and liens

People who speak with 20/20 agents overwhelmingly express fear that the IRS wants payment immediately and by any way possible. Taxpayers want protection from aggressive enforcement actions like bank levies, accounts receivables levies, wage garnishments and asset seizure. While every person’s case is unique, we have a variety of tools we can use to intercede and ensure that these extreme IRS actions are avoided. In nearly every case, we are able to use these tools to give clients the time and space they need to establish compliance and form a strategy to meeting their tax obligations.

2. Difficulty dealing with or communicating with the IRS

It’s not surprising that the second most-frequent concern we hear is that resolving this issue will require inordinate amounts of time, effort and frustration. Who hasn’t sat on hold trying to reach an account service representative? Taxpayers envision a customer service nightmare multiplied tenfold by government inefficiency. Because we work with the IRS all the time, we’re familiar with the agency’s communications processes and we know how to reach the right person to get the right information. We take over communication and do it for the taxpayer, freeing them up to run their business – and their life.

3. Revenue officer showing up at place of business and employees or others finding out about liability

While the IRS is stepping up enforcement and collection efforts of unpaid or delinquent taxes (particularly employment taxes), the agency does work to respect and protect a taxpayer’s privacy. However, in a busy office where documentation and information is shared widely, it’s entirely possible that some news about tax issues may filter out to others. But any employee or other individual will feel less anxious when they know a qualified, experienced tax resolution company like 20/20 is working on the case. The alternative is to have employees or others worry that nothing is being done to manage the liability.

4. Debt to IRS growing out of control (penalties and interest accrual)

There are very few ways to avoid having to pay interest when a tax obligation is delinquent. However, 20/20 can make certain that all obligations, interest and even any penalties will be the least amount allowable under the law. The bottom line: Doing something to resolve the situation is always better than doing nothing.

5. Getting a good and manageable resolution.

Finally, 20/20 clients are worried about achieving a fair, manageable resolution that won’t break the bank and will alleviate their worries. Fortunately, we’ve been helping clients achieve this goal for almost 20 years so we can say with confidence that we can help most taxpayers. We’ll use our experience to obtain the best resolution available under your specific circumstances.

While reactions to potential IRS action vary, it’s fairly typical for clients to feel some or all of the above concerns. Some people seem unfazed and are not frightened of the IRS at all. Typically, this reaction comes from taxpayers who have dealt with the IRS previously. The strongest fear many people experience is that others (employees, spouses, friends, etc.) will discover the problem. There’s a certain stigma about owing money to IRS – and they worry what others will think.

But the truth is many people experience these types of problems and it doesn’t indicate any lack of character. Taxes are a complicated issue – and running a business is always challenging. What’s important is recognizing when you need help in order to keep any problems from becoming overly burdensome. That’s precisely why we exist.

Summertime Tax Tip: Amending a 1040 Return

As the IRS states, the tax code is a complex set of laws affecting virtually every American individual and business. Last year the IRS processed over 244 million tax returns and other documents. The volume is a tribute to the voluntary tax system as well as the IRS workforce.

Undoubtedly, however, the complexity and volume of our tax system means that errors are almost unavoidable. As representation experts we do our best to find and correct those errors made by the IRS. But, that’s just one side of the equation. Every year countless taxpayers ask us what to do if they discover an error on a return that was already filed. The short answer is to not panic and correct the mistake.

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Questions about your unique situation? Learn more about ways we can help or feel free to contact us at any time!

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