Are You Receiving the Proper Notices?

Before the IRS is able to issue a levy against you individually or against your business, it is required to provide you with the proper notices. But how can you be sure that you are receiving all of the correct notices up until this point? The IRS typically starts with a notice telling you there is a balance due on the particular return you filed and then progresses to a “Final Notice of Intent to Levy.” A taxpayer has 30 days from the date of this letter to either fully pay the liability or take some sort of action on the account. Otherwise, the IRS can issue a levy.

Whether you are dealing with the Automated Collection Division of the IRS or local revenue officers, they are for the most part issuing the proper notices before taking any type of action.  However, there is one specific area where notices aren’t always being properly issued.  According to the Treasury Inspector General for Tax Administration (TIGTA) this is happening when there is an additional tax assessment.

When it comes to an additional tax assessment, a completely new notice should go out, giving the taxpayer an additional 30 days before any type of levy action can occur for that particular period. Even if the taxpayer had received the final notice previously and 30 days had run by, once the additional assessment takes place the new notice trumps the old one and the 30 days would start over again. It’s important to point out that the new notice would only be for the particular period in which the additional tax assessment took place. If you owed for multiple periods, the IRS could still levy on the periods that did not receive the additional assessment.

Should the IRS ever issue a levy against you or your business on a period with an additional tax assessment and it either didn’t give you the proper additional notice or didn’t wait the statutory required 30 days, there are steps you can take to fight back and get that levy released. The good news is that the IRS is aware that it isn’t always following procedure when it comes to additional assessments and it is taking the necessary steps to correct the problem. Nevertheless, at the end of the day, it’s always important to know and understand your rights as a taxpayer. We can help.

If you own a business and are facing tax troubles, learn more about IRS levies here. Or, if you are an individual with a tax liability, you can learn more about IRS levies here.

 

 

 

Payroll Tax Problems

If you own a small business, you may have been put in a position where you don’t have enough money to cover your entire gross payroll. Whether it’s because your largest account didn’t pay on time, there was a downturn in the industry or you simply didn’t foresee this cash problem early enough, it is a situation that there’s no easy answer for.

When you’re faced with this situation, what should you do? Go to your employees and ask them to hold your check? If you want to keep your employees, probably not. Get short term financing? Beg, borrow or steal?

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Most of the time there is no good answer.  Employees need and deserve to get paid and paid on time.  What happens the majority of the time is that the net payroll is met and withholding taxes go unpaid. Obviously, this is costly.  The IRS will charge a late payment penalty and interest that exacerbate the problem.  When the quarterly 941 tax return becomes due, many people decide against filing it with a balance due for the previous quarter’s liability, generating another penalty for failure to file timely.

All of this snowballs and before you realize it, there is a significant payroll tax problem on your hands.  If you are in this situation, it’s time to act now. Contact us today and find a solution that will end this.

To learn more about business payroll tax problems, click here. 

Should Your Business E-File its Returns?

The most common way for a business to accrue a new liability is, you guessed it, for failing to file a return on time or failing to pay a required Federal Tax Deposit. There are certainly numerous factors that contribute to a business remaining current and compliant, but the easiest one to overcome is to make sure your business is e-filing its tax returns.

Early last month, the IRS reported that e-filings for businesses had increased nearly 9% from the previous year. This increase continued a pattern of growth for e-filings which have steadily risen over the past 10-15 years. While a large percentage of this increase was due to corporations and partnerships electing to e-file their returns, there are benefits to any business, large or small, in filing and submitting its returns electronically.

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Filing returns online is the most efficient way for a business to submit it returns. E-filed returns are processed more quickly than paper filed returns and allow the filer to receive a proof of receipt immediately upon filing. This service is available 24 hours a day, 7 days, and also has the option to set up a direct debit for returns which require a payment – such as 941 Withholding Tax Returns. It is also safer than mailing in returns as there is not the possibility of a return being lost in the mail. Lastly, e-filing lead to fewer errors on returns as the software for the website has a feature designed specifically to catch any mistakes or miscalculations.*Corporations and partnerships can get more information about IRS e-file at IRS.gov

Accessible tools such as these ultimately aid businesses in staying current and compliant with their filing obligations with the IRS. Being current and compliant means that all returns must be filed on time and all Federal tax deposits must be made on time and in full. In turn, this can save businesses money by avoiding the costly penalties for filing a return late or incorrectly. Staying current and compliant is a necessity when negotiating a resolution for any outstanding tax liability. Before the IRS will consider your proposal for resolution, you much show that your business is current and compliant with its filing obligations. This is also extremely important after a resolution has been reached. If, for example, a business has entered into an Installment Agreement, it must not accrue any new tax liability otherwise it risk defaulting that agreement.

Need some expert advice? Give us a call today or simply fill out our contact form and we will be in touch with your shortly.

 

The Nuts and Bolts of IRS Appeals

There are two types of administrative appeals that can be filed within the IRS: the Collection Due Process Request (CDP) and the Collection Appeal Process Request (CAP).  Each is limited to specific issues that can be appealed, and each has its own scope of review.  A brief overview of each type of Appeal follows.

The Collection Due Process Request can be filed in one of two instances: when the IRS has issued a Notice of Filing of Federal Tax Lien or when it issues a Final Notice of Intent to Levy.

Generally speaking, the Notice of Filing of Federal Tax Lien does not warrant a Collection Due Process Request.  First, there must be a showing of extreme financial hardship due to the li
en filing.  While all lien filings can affect credit, loans or contracts, this is not sufficienStacked Paperst for success at Appeals.  Extraordinary and direct financial detriment must be shown.  Second, the right to appeal arises only after the lien is filed.  There are no pre-lien appeal rights.

A Collection Due Process Request based on a Final Notice of Intent to Levy, however, is used fairly frequently.  For one thing, if timely filed (within 30 days of the date of the Notice), it halts any and all IRS enforcement action for those periods listed in the Notice.  In fact, unless there are “pyramiding liabilities” for a business, it will halt enforcement action on all periods of liability, even those not included in the Notice.

For a taxpayer that needs time to gain compliance, the essential requirement for any resolution, a Collection Due Process or Equivalent Hearing Request can provide that time.  Most Collection Due Process or Equivalent Hearing Requests will take about six to eight months to be assigned and scheduled.  And at the Hearing, if the taxpayer has gained compliance, the case often can be resolved through an Installment Agreement.

A Collection Appeal Process Request can be filed when there is a levy or threat of levy (even verbal), when the IRS is seeking to default an Installment Agreement, or when the IRS rejects an Installment Agreement proposal that has been under review.  This Appeal also must be filed within 30 days of the IRS action at issue.  And, especially when a levy is at issue, Collection Appeal Process Request hearings tend to be held relatively quickly, sometimes within a few days of filing.

While a Collection Due Process Request can address substantive issues, such as whether an Installment Agreement is an appropriate alternative to levy, the scope of a Collection Appeal Process Request is limited to a review of whether the IRS followed procedure in taking the relevant action.  Nevertheless, if financial hardship can be demonstrated, it can be a very effective tool in preventing a threatened levy or releasing a levy already in place.

If you are looking for tax relief, learn more about the various ways in which we can help resolve your tax liability. 

 

Appeals on Penalty Abatement Requests

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If at first you don’t succeed… A taxpayer that is seeking an abatement on penalties will initially have to make the request through the Collections Division or other functions within the IRS.  When unsuccessful at this level, it would be wise to escalate the request to the IRS Appeals Division. Appeals is independent from the Collections Division and is tasked with resolving disputes on a fair and impartial basis without litigation.

The Treasury Inspector General for Tax Administration (TIGTA) recently conducted an audit to evaluate whether penalties assessed against taxpayers were fully or partially abated in accordance with Appeals criteria.  On July 30, 2015 TIGTA issued a statement on its findings, noting that Appeals has the authority to abate certain penalties when the abatement request has been denied by another function within the IRS.  Furthermore, the statement pointed out that in Fiscal Year 2013, Appeals abated approximately $127 million in penalties.

Generally, the audit found that in most cases, Appeals properly accepted cases in which the IRS operating division had previously denied the taxpayer’s request for abatement.  There were, however, a number of penalty appeals cases that were not abated in accordance with Appeals criteria.  TIGTA noted that in some cases, they could not determine the justification that Appeals personnel used in granting the penalty abatement. Additionally, the Treasury also determined that a small number of processing errors and control weaknesses might have affected the outcome of penalty abatement decisions at the Appeals level.

While the audit went on to conclude that additional training was necessary for Appeals Technical Employees on the requirements for justifying, documenting and granting abatement on penalties, it nonetheless illustrated the point that Appeals is an effective venue for a second chance at abatement of penalties.

We understand that appeals can play an important role in obtaining a desirable resolution. Click here to learn more about how we assist you with your unique situation.

Seizure and Sale Procedures Can Be Improved

For those with any experience dealing with the Internal Revenue Service, it may come as no surprise that the entity has some room for improvement.  According to a report recently released by the Treasury Inspector General for Tax Administration (TIGTA), the IRS needs to improve its compliance with procedures for conducting sales of property seized for unpaid taxes.

To break it down, TIGTA recommended that the IRS do the following to improve its seizure and sale procedures:

  • Mandate that Property Appraisal and Liquidation Specialists (PALS) consistently prepare a detailed sale plan once they accept custody of the seized property
  • Document the return of all personal items from seized vehicles; and
  • Require the PALS to follow Internal Revenue Manual (IRM) requirements for conducting a sale adjournment and recalculating the minimum bid, and ensure that any adjustments are supported by the facts of the situation and properly documented.

In response to the report, IRS officials did agree with most of the recommendations; however, disagreed with two recommendations to add IRM guidance for:

  • Indirect expenses of seizure sales that can be charged to the taxpayer and
  • Return of license plates from seized vehicles that are sold. TIGTA maintains that the appropriate IRM sections should be updated to provide clear guidance for IRS employees and managers to follow.

It is safe to say that the IRS, in performing its duties, does not always seem to place a high priority on protecting taxpayer rights or advising taxpayers of the different rights and remedies available to them under the law. There are provisions in place to help ensure that taxpayers are properly advised and taxpayer rights are honored. Yet, given the opposing interests of the parties and the overarching function of the IRS to collect revenue, these taxpayer protections sometimes seem to be treated as a mere formality in practice.  This illustrates why it is important and valuable to have an experienced representative working on your behalf to advocate for and protect your best interests at all times while resolving your outstanding tax liabilities.

We understand that the world of tax resolution can be confusing, click here if you’d like to connect with a tax expert today to discuss your situation in more detail.  If you are a tax professional, take a look at some of these useful resources, we hope you find them to be helpful.

Dilemma Posed by Tax Extenders

Every year tax professionals around the country hold their proverbial breath waiting for Congress to take action on the tax code.  And almost as sure as the sun coming up, Congress avoids permanent tax policy discussions by agreeing on and passing a series of tax extenders.  Tax extenders are the common term for what are a set of temporary corporate and individual tax breaks. The extenders are usually passed with the goal of assisting taxpayers and stimulating the economy.

The dilemma posed by tax extenders often centers on tax planning. With most extenders lasting one or two year, consistent and proactive tax planning advice can be difficult to give. For example, quite a few of the current extenders up for debate expired in 2013 but were reinstated for 2014 in December of 2014 (Russell, Accounting Today). The idea that that if a tax law goes into effect two weeks before the end of the year should be inconceivabBlank Notebookle. And yet, Congress puts American through it almost every year.

As is stands, tax professionals have no choice but to offer planning advice on what Congress will “probably” do based on past years of doing the same.  Is that good planning or educated guessing?

Perhaps you have a client who could use our assistance, or have questions that we can help you answer. Click here to get in touch with one of tax experts, today.

IRS Trying to Make Good on Preventing Unpaid Employment Taxes

Federal Tax Deposit Alerts (FTD Alerts) bring to light an employer’s declining payroll tax deposits.  The goal of the alert was to have the IRS meet with employers, determine the cause of the declining deposits and ensure that the employer maintains compliance.  As the IRS budget suffered year after year since 2010, so did the effectiveness of the FTD alert system.  The system has relied almost entirely on a mail campaign, but that is about to change.

The IRS recently announced that as a part of its Early Interaction Initiative, Collections “work plans have been adjusted to allow field officials to work more FTD alerts more quickly.”   As a result, “The number of cases assigned to Field Collection will increase under the Early Interaction Initiative.”  Business taxpayers, especially those with preexisting liabilities should be expecting more surprise knocks from IRS Collections this year.  For years, the IRS has employed FTD alerts as a tool to combat accruing employment taxes.

Despite the fledgling FTD Alert program over the past several years, the IRS has been consistent in one message concerning employment tax and that is, “Applying the tax laws with fairness for all requires that the IRS address payroll tax delinquencies as soon as possible.”  In light of the IRS’ budget woes, it’s natural to question the sustainability of this plan as well as Collections core functions.  Yet, the IRS’ announcement appears to signal that the IRS has a plan in place and is serious about making this work.

It is now more important than ever to get in front of your tax issue sooner rather than later.  The last thing you want is to be caught off guard when the IRS comes knocking on your door.  Fighting on behalf of taxpayers just like you is what we do every day – make it a point to get in touch with one of our tax experts so that we can begin to evaluate your case, today.

If you’d like to read the IRS announcement in full detail, click here.

20/20 Representative Teaches at NAEA’s 2015 NTPI Conference

20/20 Tax Resolution’s Vice President, David Miles, EA, taught two different classes at the National Association of Enrolled Agents (NAEA) NTPI 2015 National Conference in Las Vegas Nevada on August 3rd.  As an outstanding education provider, the NAEA developed the National Tax Practice Institute (NTPI) — a three-level program of study that covers all facets of representing clients before the IRS.

Miles describes NAEA’s NTPI conference as, “an extraordinary opportunity to come together with some of the most experienced and talented collection representatives in the country.  Being able to participate as an instructor alongside these gifted and talented individuals was an honor.”  In his Level 1 class, Miles works to establish a foundation for all that practice before the IRS Collections Division.  In his Level 2 Appeals class, there is a more acute focus on the nuances of the IRS’ Collection Appeal programs coupled with practical problem-solving lessons.  When asked about gauging the success of each specific course, he explains, “The real success of the conference are the attendees, which includes Attorneys, CPAs, Enrolled Agents, etc. Their energy and commitment to practice is truly inspiring.  My single focus as an instructor is to be good enough for them.”

With over 18 years of tax representation and consultation experience, Miles continues to be an active educator for other tax practitioners on both a local and national level.  20/20 Tax Resolution is proud to be at the forefront of the tax representation industry and recognizes the importance of building relationships and networks while attending this annual conference.  When reflecting on these recent events, Miles sums it up perfectly, “The best part of attending NAEA’s NTPI conference is seeing practitioners throughout the country sharing experiences and knowledge for the sole purpose of improving our service to our clients.  It’s a unique and vital camaraderie.”

20/20 Attends the 2015 Nationwide IRS Tax Forum

On July 29, 2015, 20/20 Tax Resolution’s Vice President, David Miles, EA, and Senior Associate, M. Anita Ward, EA. were in attendance of the 2015 Nationwide IRS Tax Forum in Denver, Colorado.  Taking place in the Hyatt Regency Denver at the Colorado Convention center, the forum featured a full agenda of the latest tax law information which covered key federal and state tax issues from the IRS and leading industry experts.  On top of that, the event provided numerous networking opportunities and exhibits featuring the latest products and services for those in tax preparation and representation industries.

The 20/20 team helped to run the National Association of Enrolled Agents (NAEA) booth.  Throughout the day, they were able to successfully promote the Enrolled Agent (EA.) designation while simultaneously informing the tax professionals in attendance of the forum about the valuable resources offered by the NAEA.  Staying abreast of IRS updates, advocating for sensible and more permanent changes to the tax code, and providing a forum for EAs to have technical questions answered by other EAs were just a few topics that were covered by 20/20 representatives throughout the course of the day. 20/20 Tax Resolution is a proud partner of the NAEA and was excited to be able to attend such a great event!